It almost sounds like a joke, or perhaps the corporate equivalent of an Oedipal complex, but

The Wall Street Journal

reported on Friday that one of the possible bidders for

Nabisco Group Holdings


could be

R.J. Reynolds Tobacco Holdings


, the company's one-time subsidiary.

Nabisco Group Holdings, whose sole asset is an 80.6% stake in

Nabisco Holdings


, the maker of Oreo cookies and Ritz crackers, said last month that it is exploring a sale of either itself or its subsidiary.

No strangers to boardroom drama, R.J. Reynolds and Nabisco have led intertwined corporate lives since 1985, when the tobacco company first bought the food company. The maker of Winston and Camel cigarettes, spun off last year, might take an interest in the holding company if it first gets a decent price for its stake in the cracker maker, according to a theory forwarded Thursday in a report by Martin Feldman, an analyst for

Salomon Smith Barney


The deal would work like this: First, the holding company sells its stake in the food company for at least $45 a share, equivalent to around $30 a share because each NGH share is worth around 0.655 per Nabisco share. This would make the holding company a (caps Feldman's) "PURE CASH POOL."

But, Feldman noted, this pure cash pool would be marred by tobacco stains. The holding company may still trade at a discount because investors fear that tobacco litigants might try to tap the former parent's assets should R.J. Reynolds ever go bankrupt from adverse rulings.

So, Feldman concluded, R.J. Reynolds would then be the most likely buyer. After all, it can't get any more liable for judgments against itself.

The deal is just one possibility, though perhaps the most fun. The fight for ownership of RJR Nabisco led to the largest leveraged buyout ever, chronicled in the book

Barbarians at the Gate

. People made movies about this.

After explaining his headline-grabbing RJR theory, Feldman also named other tobacco companies, including

Phillip Morris

(MO) - Get Report


Brooke Group


, the owner of


, as possible buyers.

And there's always Carl Icahn. The corporate raider who never ever ever ever gives up has

offered $16 a share, or around $5.2 billion, for the holding company in his fourth buyout attempt since 1996.

Anything's possible. The


, citing people familiar with the matter, said RJR might just make a bid for the holding company, food subsidiary and all. The fear that legions of hacking, wheezing litigants could take the holding company's assets has depressed the stock.

Despite its severance from R.J. Reynolds, NGH has a market capitalization of $4.7 billion, or less than half the $10.3 billion market value of the food company, even though it owns 80.6% of the food company.



said that "one scenario being floated" would have the tobacco company buy the holding company and flip ownership of the food company to some other food company. That way, the paper wrote, R.J. Reynolds could profit from the arbitrage and essentially scrub off the tobacco stains, sparing the acquiring food company the attendant liability.

Even the


likes Feldman's theory better, though the paper conceded that another scenario also seems possible: Reynolds could just do nothing.

Nabisco shares were trading up 7/8, or 5%, to 17 1/2 while Reynolds shares were up 1/8, or 1%, to 22 15/16. (Nabisco finished Friday regular trading up 7/16, or 3%, at 17 1/6, while Reynolds closed down 1/16, or 0.3%, at 22 3/4.)