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RJR Nabisco: Current And Future Financial Policy

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Current and future financial policy:
After the merger of RJR Nabisco the company is performing well financially with the net income of $1,064 million dollars in the year 1986 and $1209 million dollars in 1987. Despite of that the company’s share price was low compared to the worth of the company, and the stock price at the end of 1987 was $45 per share. The main reason for that was the joint operation of food and tobacco business. The CEO of the company concluded that their food division was highly undervalued and only way to recognize their value was through the leveraged buyout of the undervalued food assets. After that, CEO announced the LBO decision in front of the board, and board gave its approval for the management to go ahead with its
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