Shredded wheat was invented in the late 19th century and has been marketed under the Nabisco brand name since 1925. In 1985 the R.J. Reynolds Tobacco Company acquired the Nabisco Company and in 1988 the RJR Nabisco Company underwent a leveraged buyout (LBO) led by Kolberg, Kravis, and Roberts that recapitalized the firm at a record $25 billion (Food Institute Report 1988, P. 2). The firm has continued to struggle under its LBO debt in a fashion that suggests the $25 billion price paid was too high. In September 1992, RJR Nabisco attempted to sell its ready-to-eat (RTE) breakfast cereal unit to General Mills for $450 million; however, the deal fell through because of active antitrust investigation. Two weeks later Nabisco and Philip Morris/Kraft General Foods (Post Cereals) announced a preliminary agreement whereby Philip Morris would acquire the Nabisco breakfast cereal franchise for the same price, $450 million. That deal was consummated in January 1993; however, it was immediately challenged by the state of New York on antitrust grounds. This paper is based to a large extent upon the public record of that ongoing antitrust case and detailed supermarket scanner data on the ready-to-eat cereal industry that the University of Connecticut Food Marketing Policy Center has purchased from Information Resources, Inc.