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RJR Nabisco Holdings Corp.
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RJR Nabisco Holdings Corp.
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[RJR Nabisco Logo]
January 26, 1996
Dear Fellow Stockholder:
By now, you should have received materials from both RJR
Nabisco and a group led by Bennett LeBow and Carl Icahn relating to the
consent solicitation of RJR Nabisco shareholders now underway by the
LeBow/Icahn group. LeBow has made a number of misleading statements about RJR
Nabisco's position regarding a spin-off of Nabisco and the company's views
toward its shareholders.
We believe LeBow's attempts to mischaracterize the company's
position on a spin-off reflect his increasing sense of desperation as he
discovers that a large number of RJR Nabisco shareholders want nothing to do
with a solicitation from either Lebow or Icahn. Already, thousands of
shareholders have indicated their support of management by returning yellow
cards to us.
Both men stand to gain financially at the expense of RJR
Nabisco's shareholders and we believe that as more shareholders focus on that
fact, the rhetoric from LeBow and Icahn will get even more shrill. For the
record, we want to summarize again the company's views on this matter:
o Contrary to what LeBow and Icahn have said in their mailings to you,
in press interviews and in their paid advertisements, RJR Nabisco's
board and management are not waiting for you to tell us to spin off
Nabisco - we know you want to do it, we want to do it - and LeBow and
Icahn know it.
o Your board is committed to accomplishing a spin-off of Nabisco as
soon as it can be accomplished in a manner that does not jeopardize
your financial interests and is consistent with the company's
commitments. In consultation with the best legal, tax and financial
advisors available, however, your directors concluded, unanimously,
that an immediate spin-off would undermine, not increase, your share
value.
o Many independent financial analysts have published reports consistent
with the views of the company's board and management on the spin-off
issue and even two of the analysts cited in the LeBow/Icahn consent
materials do not endorse an immediate spin-off of Nabisco.
o LeBow and Icahn have proposed a by-law change that could enable them
to gain control of RJR Nabisco and exploit the company for their own
benefit - even if holders of a majority of the company's shares do
not agree with them.
o Contrary to what LeBow and Icahn have said, there are consequences to
consenting to their proposals. A consent is a vote to put them one
step closer to gaining control of the company.
o We believe that the LeBow/Icahn group is resorting to increasingly
strident rhetoric in an attempt to distract RJR Nabisco's
shareholders from a simple truth: LeBow and Icahn are using this
consent solicitation process to try to gain control of RJR Nabisco in
order to enrich themselves at your expense.
o Consider this recent quotation from Martin Feldman, an independent
security analyst at Smith Barney:
"The LeBow spin-off proposal is NOT likely to enhance
shareholder value yet burdens RN with great risk. Prudently,
existing management is likely to add value by spinning off
Nabisco in a lower risk environment. Support existing
management." (January 24, 1996 First Call report(*))
- ------------
(*) No permission has been sought or received to quote from, or
refer to, published materials cited in this letter. RJR
Nabisco has from time to time obtained investment banking
services from Smith Barney or one of its affiliates,including
as the manager or co-manager of a public offering of securities
of RJR Nabisco or an affiliate within the last three years.
Your best chance to prevent LeBow and Icahn from exploiting
your investment in RJR Nabisco is to refuse to sign or return any of the
BLUE consent cards they have mailed to you. If you have previously
returned a blue consent card to the LeBow/Icahn group, you have every right
to change your mind and revoke your consent by signing, dating and
returning the accompanying YELLOW revocation of consent card to the
company, using the enclosed postage-paid envelope.
We believe there is considerable upside for the value of your
shares during the period that we manage our way toward additional earnings
growth and an eventual spin-off. We believe our approach - pursuing an
earnings growth plan combined with the prospect of successfully separating the
food and tobacco businesses when your investment will not be jeopardized -
offers significant potential rewards for you. If you have any questions or
need assistance in completing the enclosed YELLOW revocation of consent card,
please call our solicitors: MacKenzie Partners, Inc., toll free, at
1-800-322-2885 or D.F. King & Co., Inc., toll free, at 1-800-290-6430.
On behalf of the Board of Directors,
/s/ Charles M. Harper /s/ Steven F. Goldstone
____________________ __________________________
Charles M. Harper Steven F. Goldstone
Chairman President and
Chief Executive Officer
