Altria plans to spin off Philip Morris
NEW YORK (AP) - January 30, 2008 The two tobacco units each make Marlboros, one of the world's
top-selling cigarette brands.
Lausanne, Switzerland-based Philip Morris International has said
that it would rank as the biggest non-governmental cigarette maker
in the world, behind the state-owned China National Tobacco. PMI
makes Marlboros, L&M and Bond Street cigarettes, while Philip
Morris USA makes the Marlboro, Virginia Slims, Parliament and Basic
brands for U.S. consumers.
The separation could shield Philip Morris International from
U.S. legal and regulatory issues, such as pending legislation to
give the Food and Drug Administration the authority to restrict
tobacco advertising, regulate warning labels and remove hazardous
ingredients.
Critics of the spinoff say it gives the international unit the
chance to unleash its marketing on nonsmoking women and children in
poor, developing countries.
Once the spinoff to Altria shareholders is complete, New
York-based Altria will consist mainly of it domestic cigarette
business Philip Morris USA and a 28.6 percent stake in London-based
beer company SABMiller, which makes Miller Genuine Draft, Pilsner
Urquell and Snow. Altria plans to shut down a Park Avenue
headquarters and move to Richmond, Va., where Philip Morris USA is
based.
The plan to give PMI its independence is part of a multiyear
restructuring that started with the spin off of Altria's majority
stake in Kraft Foods Inc. in March of last year.
The spin-off will be done through a distribution of one PMI
share for each Altria share.
Altria also announced plans for dividends and share buybacks
after the spin is complete.
Altria shareholders would get an annual dividend of $1.16 per
share, and the company would buy back $7.5 billion worth of shares
over two years. Philip Morris International shareholders would get
a dividend of $1.84 a share, with buybacks of $13 billion over two
years.
Altria projected earnings per share growth of between 9 percent
and 11 percent this year, while PMI earnings per share was expected
to grow at a slightly higher 12 percent to 14 percent rate.
Shares of Altria Group Inc. rose 72 cents to $76.84 after the
announcement. Its shares are near the high end of their 52-week
range of $60.91 to $79.59.
(Copyright 2008 by The Associated Press. All Rights Reserved.)