Email
Password
(Forgot Password?)
"Apart from being a leader in the food industry, Kraft is a great defensive stock too. . . .
Dow Jones Indexes said it was adding Kraft as the Dow had no representation in food products. The last stand-alone food company in the index was General Foods, which was removed in 1985.
Kraft's spokesman Michael Mitchell said the company was "thrilled that Kraft will be joining the many iconic companies that make up the Dow Jones Industrial Average. Joining the stocks of the Dow Jones index is a wonderful affirmation of our leadership in the food sector."
The changes won't cause any disruption in the level of the index, Dow Jones Indexes said.
The last component change in the Dow occurred on February 19, 2008, when tobacco company Altria Group and Honeywell were replaced by Chevron and Bank of America .
Jump to full article »
A week of pain and ignominy for American International Group Inc. <AIG.N> took another hard turn on Thursday when it got booted from the Dow Jones industrial average, ending the shortest term any company has spent in the blue-chip index since the Great Depression.
Taking its place come Monday's opening bell is Kraft Foods Inc. <KFT.N>, the first pure food company in the index in 23 years. Emblematic of the current market turmoil, the maker of such comfort foods as Oreo cookies and Kraft Cheese was apparently seen as a better fit for the world's most-watched stock index than another risky financial company. . . .
The last component change in the Dow occurred on February 19, 2008, when tobacco company Altria Group <MO.N> and Honeywell <HON.N> were replaced by Chevron <CVX.N> and Bank of America <BAC.N>.
Altria Group, Inc. (NYSE: MO) today announced third-quarter diluted earnings per share from continuing operations of $1.24, up $0.19 or 18.1% versus the prior year, including favorable tax items of $0.05 per share and charges of $0.02 per share for asset impairment, exit and implementation costs, as well as other items detailed on the attached Schedule 7.
"In the third quarter, we continued to witness improvement in our business fundamentals, which generated robust earnings growth," said Louis C. Camilleri, chairman and chief executive officer of Altria Group, Inc. "In addition, we took numerous steps to accelerate our growth by investing behind product innovation and announcing our intention to pursue a further restructuring of our company." . . .
On August 29, the Board of Directors of Altria Group, Inc. announced its intention to pursue the spin-off of PMI to Altria's shareholders. The Board anticipates that it will be in a position to finalize its decision and announce the precise timing of the spin-off at its regularly scheduled meeting on January 30, 2008.
In addition to a final determination by the Board, the spin-off of PMI will be subject to the receipt of a favorable ruling from the Internal Revenue Service, the receipt of an opinion of tax counsel, the effectiveness of a registration statement with the U.S. Securities and Exchange Commission (SEC), as well as the execution of several inter-company agreements and the finalization of other matters.
On September 27, PMI filed with the SEC a preliminary registration statement on Form 10 in preparation for its potential spin-off from Altria. In addition, Altria submitted a private letter ruling request to the Internal Revenue Service. . . .
As of September 30, 2007, Altria Group, Inc. owned 100% of Philip Morris International Inc., Philip Morris USA Inc. and Philip Morris Capital Corporation, and approximately 28.6% of SABMiller plc.
Altria Group Inc. Chief Executive Officer Louis Camilleri said in April he'd consider calls from shareholders to split the world's largest cigarette maker in two. Now investors may not want him to.
In March, the company had spun off its 89 percent stake in Kraft Foods Inc. Speculation grew that its international tobacco division, growing faster than the U.S. cigarette operations, would be spun off next to further unlock shareholder value.
Altria, which will probably report an 8 percent increase in second-quarter profit tomorrow, now may be better off taking on debt and buying back stock, some analysts and investors said.
``If you had asked me two years ago, I'd say spin off international,'' said Brian Barish, who oversees $10 billion, including 3 million Altria shares, as president of Cambiar Investors LLC in Denver. ``But now I'm decidedly mixed.''
Altria Group Inc. won't rush to spin off its international tobacco unit while studying options to increase the share price, its chief executive officer said.
``This decision is for the next 50 years,'' not ``the next 50 days or the next five years,'' Louis Camilleri said today at Altria's annual meeting in East Hanover, New Jersey.
Altria, the world's largest traded tobacco company, will consider separating the international and U.S. tobacco units over the next several months, Camilleri said. The move, sought by some investors, would allow the international division to buy more competitors and repurchase shares.
``Altria's board has been very cautious,'' said Brian Barish, who oversees $10 billion, including 3 million Altria shares, at Cambiar Investors LLC in Denver. The spinoff ``may be a 2008 event,'' he said.
Governments must effectively quarantine Altria/Philip Morris, the world's largest multinational tobacco company, by passing legislation to stop the spread of the global tobacco pandemic. That's the message of more than 100 youth and adult tobacco control advocates from 13 states who will hold a colorful demonstration outside the Altria shareholders' meeting in New Jersey (April 26) and company headquarters in New York City (April 27) in a show of global solidarity against the tobacco industry. Philip Morris's parent company has recently spun off its Kraft affiliate, and there is widespread speculation that Philip Morris International and Philip Morris USA will separate soon. "The proposed breakup of Philip Morris poses the risk that Philip Morris International will become even more effective at spreading its toxic product," says Anna White of the corporate accountability group Essential Action, "An independent Philip Morris International, which is likely to be based in Switzerland, will no longer feel constrained by public opinion, or the possibility of domestic regulation or litigation, in its home country and most important market, the United States."
Altria Group, Inc. (NYSE: MO) held its 2007 Annual Meeting of Shareholders here today, and its chairman and chief executive officer Louis C. Camilleri told an audience of approximately 200 shareholders that the company remains as committed as ever to meaningfully enhance long-term shareholder value.
"Over the next several months, we will continue to carefully and diligently examine the benefits of a spin-off of Philip Morris International and other possible value-enhancing options to decide the optimal long-term strategic course to follow," Mr. Camilleri said. "Once a decision has been made, we will promptly communicate it."
"The highlight of the past year was undoubtedly the spin-off of Kraft Foods, which we completed on March 30," Mr. Camilleri said. "Achievements on the litigation front over the past year were particularly noteworthy, and confirmed our successful record in the appellate courts."
Altria Group, Inc. (NYSE: MO) today completed the spin-off of Kraft Foods Inc. (NYSE: KFT) to Altria shareholders.
The distribution of the approximately 88.9% of Kraft's outstanding shares owned by Altria was made today, to Altria shareholders of record as of 5:00 p.m. Eastern Time on March 16, 2007 (the "record date").
Altria shareholders received 0.692024 of a share of Kraft for each share of Altria common stock held as of the record date. Altria shareholders will receive cash in lieu of fractional shares for amounts of less than one Kraft share.
Shares of Kraft Foods Inc., the foodmaker being spun off today by Altria Group Inc., may fall as investors bet that selling cookies will yield less growth than peddling cigarettes.
Kraft shares dropped 12 percent this year as some Altria holders shorted, or bet against, the world's second-largest food company and the maker of Oreos. They may head lower as Altria, which makes Marlboro cigarettes, distributes 1.5 billion Kraft shares, spurring investors who favor tobacco to sell the stock.
``Some holders with a very positive view on tobacco will get rid of their Kraft shares,'' said Michael Embler
Litigation risks that have dogged the industry have receded to a point that earlier this month Moody's raised its rating outlook for American tobacco companies for the first time in five years to stable.
"Although the number of outstanding lawsuits still remains significant, the types of cases have proven to be more manageable," Janice Hofferber and Angela Jameson of Moody's wrote in a March 8 report.
Two of the sector's bigger legal threats _ a case brought by the Department of Justice and the so-called Schwab "lights" case _ are both being appealed. Those and other remaining cases are less threatening to the industry in part, analysts say, because previous cases have built legal precedent, thus increasing the companies' ability to predict how courts will rule.
Further, tobacco consumption is declining at a slower rate, according to Moody's.
Attorneys for plaintiffs in a tobacco liability lawsuit said on Wednesday that they would not seek a court order to try to bar Altria Group Inc.'s spin-off of Kraft Foods Inc. . . .
Law firm Cohen Milstein Hausfeld & Toll in Washington, which represents smokers who contend tobacco companies misled them into thinking that light cigarettes were safer than regular cigarettes, said in a statement that it would not pursue a possible injunction against the planned spin-off.
"After intense investigation and attempted coordination with the United States Department of Justice, which declined to move forward on the issue, Cohen, Milstein, Hausfeld & Toll has concluded that there does not appear a sufficiently strong legal basis to justify proceeding against Altria in an attempt to prevent the spin-off," the law firm said.
The Altria Group posted higher quarterly profit Wednesday, helped by higher cigarette prices and increased sales of cigarettes overseas, while earnings tumbled at the Kraft Foods unit it plans to spin off this spring.
Altria said Wednesday that it would spin off its 89 percent stake in Kraft on March 30. The move had been widely expected by shareholders, who were looking for Altria’s tobacco business to be freed from the weaker Kraft business.
The earnings posted by both companies highlighted their differences: Kraft has struggled under higher commodity costs and sluggish sales, while Altria’s Philip Morris tobacco businesses have been bolstered by price increases and more sales overseas.
"The Altria situation raises a number of issues," said Michael Hausfeld, an attorney at Cohen, Milstein, Hausfeld and Toll.
Hausfeld represents plaintiffs in a case known as Schwab after the lead plaintiff, Barbara Schwab. The case claims tobacco companies deceived smokers for years about the safety of "light" cigarettes.
The lawyer said a court is determining whether to affirm the case's class-action certification, which allows the case to continue as a class action suit.
He said if the certification is upheld, Altria's "litigation position changes dramatically" since the plaintiffs are seeking more than $200 billion in damages. The racketeering law under which the case was filed would triple any damage award. Altria would need to be able to pay any damages without the Kraft subsidiary as an asset to go forward with the spin-off.
Hausfeld said any injunction would have to be filed before the spinoff takes place March 30.
Arguments in the appeal are scheduled for March or early April -- a timeline that may have prompted Altria to announce the spinoff Wednesday, Hausfeld said. . . .
Ronan said any attempt at stopping the spinoff would face a number of hurdles, including proving that Altria would be bankrupted by any damage award resulting from the Schwab case.
"That is a huge hurdle for these plaintiff's lawyers to overcome," Ronan said. "They might be realistic enough to say it's not worth the money."
Altria Group Inc. said Wednesday that it will distribute the 89% of Kraft Foods it owns to Altria shareholders on March 30 in an announcement of the long-awaited details for the planned spinoff. MO87.26, -0.28, -0.3% ) shareholder will get 0.7 of a share of Kraft for each share of Altria they own as of March 16 and will receive cash in lieu of fractio
For all the industry’s apparent troubles, however, the future of cigarettes appears to be brighter than ever.
That at least is the message investors are sending as the Altria Group — the company once known as Philip Morris and the maker of the world’s most popular cigarette, Marlboro — prepares to split itself by spinning off its Kraft Foods division to shareholders and become, once again, primarily a tobacco company. Today, Louis C. Camilleri, the chief executive of Altria, is expected to set a timetable for completing the spinoff.
It is a move that Wall Street is responding to with the equivalent of a standing ovation, but it is not because Kraft Foods, the world’s second-largest food company, after Nestlé, will finally shed the taint of tobacco.
Investors are glad that Altria will finally be rid of Kraft Foods, the maker of Oreo cookies, Velveeta and Tang. Since October, when the company announced its plan for the move, its shares have risen 10 percent.
“Something that is forgotten in all of this is people like to smoke,” said David Adelman, an analyst at Morgan Stanley, who noted that United States tobacco stocks have beaten the Standard & Poor’s 500-stock index in each of the last six years. “It’s enjoyable and there’s not an alternative product.”
He added: “If frozen dinners get too expensive, people will try something else. That’s not true with cigarettes — you are not up at night worried about that product that is going to make cigarettes obsolete.” . . .
Why is Wall Street so infatuated with cigarettes? Cigarettes have certain advantages over other consumer products, not the least of which is that they are addictive. They are inexpensive to make, require almost no innovation, there is a global market for them, and cigarette makers can raise prices without seeing much of a drop in business.
On top of all that, a recent string of court decisions has convinced investors that the worst of the litigation against tobacco companies is over.
That, in turn, has allowed Altria to move forward with a revamping that begins with cutting Kraft loose and will ultimately allow Altria to use the huge amounts of cash generated by cigarettes to buy back stock or acquire other tobacco companies, particularly overseas. . . .
Michael D. Hausfeld, a lawyer in a pending class-action lawsuit against tobacco companies, said he might file an injunction to stop a spinoff of Kraft. The lawsuit, first filed in 2004 and known as the Schwab case after the lead plaintiff, Barbara Schwab, contends that cigarette manufacturers defrauded consumers by marketing light cigarettes as safer than regular cigarettes.
The idea behind seeking an injunction is that a judgment could be so enormous that Altria might need Kraft — with a market capitalization of $57.25 billion — to pay off the damages.
At times, as a tobacco investor or a tobacco analyst, it seems like an unending stream of negative news. You hear about smoking bans, a new piece of legislation. You hear about criticism from the World Health Organization. And then lo and behold, manufacturers release their results. And they are good.David Adelman, an analyst at Morgan Stanley.
If frozen dinners get too expensive, people will try something else. That’s not true with cigarettes — you are not up at night worried about that product that is going to make cigarettes obsolete.David Adelman, an analyst at Morgan Stanley, on Altria's Kraft spinoff.