Deal could cough up rash of cash for RJR.

• Position: Brief Article

It might have seemed like a crushing blow, that $144.8 billion verdict in July against the tobacco industry on behalf of Florida smokers, but don't count out Winston-Salem-based R.J. Reynolds Tobacco Holdings Inc. just yet. First, there are the appeals. If they don't work, Reynolds has a contingency fund -- a $1.7 billion cash cushion -- created seemingly out of thin air.

In a bit of Wall Street wizardry, Reynolds bought $11.7 billion in cash for about $10 billion. Don't try this trick at home. It only works if the money is nicotine-stained and the buyer makes cigarettes.

Last year, RTR Nabisco Inc. split into Nabisco Group Holdings Inc. and R.J. Reynolds Tobacco Holdings Inc. Nabisco Group Holdings begot Nabisco Holdings Corp., a separately traded company that runs Nabisco Inc., which actually makes food. Nabisco Group Holdings controls 80% of Nabisco Holdings stock.

In March, Nabisco Group Holdings put itself and everything it owns on the block. Richmond, Va.-based Philip Morris Cos., Reynolds' archrival, zeroed in on Nabisco Holdings, offering $55 a share, about $14.9 billion. If the deal doses, Philip Morris will walk away with some powerful cookie and cracker brands. Among the crumbs it leaves behind: the parent, Nabisco Group Holdings, and its...