Wednesday August 29, 08:45 PM
Altria to spin off Philip Morris International
By Amandine Ambregni
NEW YORK (AFP) - US tobacco giant Altria announced plans Wednesday to spin off its Philip Morris International division, continuing a restructuring begun this year for the maker of Marlboro and other cigarette brands.
"Today's announcement underscores our sustained and determined commitment to create enduring long-term shareholder value," said Louis Camilleri, chairman and chief executive of Altria.
"I am convinced that this transaction will enhance growth at both Altria and Philip Morris International."
The move by the Altria board would spin off Philip Morris International, based in Lausanne, Switzerland, as an independent entity. This would become free from litigation and public relations problems in the United States over tobacco marketing.
The company said its board will be in a position to finalize its decision and announce the precise timing of the spin-off at its board meeting on January 30, 2008, but that this is subject to a favorable tax ruling from US authorities and other issues.
Upon completion of the plan, Camilleri would become chairman and chief executive at Philip Morris International.
Michael Szymanczyk would be named chairman and chief of Altria Group (NYSE: MO - news) , which would leave New York and return to its original Philip Morris headquarters in Richmond, Virginia.
Earlier this year, Altria spun off Kraft Foods (NYSE: KFT - news) , which was acquired in the 1980s by the tobacco group then known as Philip Morris.
The reorganization would leave a US firm with its tobacco operations -- which are declining at a rate of one to two percent annually in view of lower rates of smoking -- and a 29 percent stake in SABMiller (LSE: SAB.L - news) , the British-based firm that is the world's second-biggest brewer.
Philip Morris International would have annual revenues of 48 billion dollars, three times that of the rest of the company.
The non-US operations for Altria have been growing more rapidly while US tobacco consumption slows. Philip Morris brands, which include Marlboro and Virginia Slims, represent 15 percent of the global market and 51 percent in the United States.
The move had been widely anticipated by market analysts as a way for Altria to "unlock" value for shareholders.
Deutsche Bank (Xetra: 514000 - news) analysts recommended buying the shares "as the opportunity for value creation via balance-sheet leverage and higher dividend payouts at both domestic and international tobacco companies remains compelling."
But Damon Moglen, vice president of the Campaign for Tobacco-Free Kids, said the move "should set off global alarms that nations must implement proven measures to reduce tobacco use and save lives."
"Nations are in a race against time to stop a global tobacco epidemic that will kill one billion people worldwide this century unless urgent action is taken," Moglen said in a statement.
"Philip Morris and other tobacco companies are moving relentlessly to exploit new markets and find new customers for their deadly products, especially in developing nations. Governments must act even more quickly and aggressively to protect the health of their citizens."
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