Carl Icahn Increases Bid for Nabisco

Updated from 5:28 p.m. EDT

Carl Icahn, the corporate takeover artist, pressed his case for taking control of Nabisco Group Holdings (NGH) by offering Tuesday to buy the entire company and raising his bid to $16 a share.

The proposal came one day after Nabisco rejected Icahn's previous bid of $13 a share for about 30% of the company's shares, dismissing it as "inadequate."

Instead, Nabisco said Monday that it had retained Warburg Dillon Read and Morgan Stanley Dean Witter as financial advisers for a possible sale of Nabisco Group or its 80.6% stake in Nabisco Holdings (NA), the maker of Oreo cookies and Planters peanuts.

Icahn's new $16-a-share offer would value the Nabisco Group at about $5.2 billion.

Icahn, who is the Nabisco Group's largest individual shareholder with an 8.9% stake, had bid $13 a share for 100 million shares of Nabisco last Thursday in order to raise his total stake of the company to 40%, saying he would consider selling Nabisco if he succeeded in gaining control.

In a letter Tuesday to Nabisco shareholders, Icahn described his higher offer as "friendly." But he showed increasing frustration with Nabisco's refusal to accept his offers.

"If you are not willing to go forward with me and do not officially put the company up for sale now, stockholders can only conclude that your press release was simply designed to give them false hopes and prevent your losing a proxy contest," Icahn said of Nabisco's management.

In the letter, Icahn assured Nabisco shareholders that he could obtain enough financing to buy all of Nabisco. "On a friendly basis, there should be no problem in facilitating the acquisition of NGH," the letter said.

Shares of both Nabisco Group and Nabisco Holdings were halted on the New York Stock Exchange shortly before the close of trading Tuesday. Nabisco Group was up 2 1/8, or 17%, at 14 1/2, while Nabisco Holdings was up 6 5/8, or 20%, at 39.

This is Icahn's fourth attempt since 1995 to buy Nabisco and follows a proposal on March 13 to take over the company's board. After Icahn made his intentions known, Nabisco adopted a "poison pill," which is aimed at discouraging takeovers by granting current shareholders the right to buy preferred stock if any person gains control of 10% of the company's ownership.

Nabisco Group was formed last June, when RJR Nabisco Holdings spun off its tobacco business as R.J. Reynolds Tobacco Holdings (RJR) and changed its name.

Nabisco had no immediate comment on Icahn's higher offer.

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