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Lorillard asks users to help fight menthol ban 

Lorillard Inc., the maker of the top-selling menthol cigarette in the U.S., is enlisting its customers' help in defeating a proposal supported by former health officials to include menthol in a ban of flavored tobacco.

The company, based in Greensboro, N.C., sent e-mail to smokers of its Newport cigarette, urging them to speak out against efforts to add menthol to a list of flavors that would be banned under legislation to regulate the $89 billion-a-year U.S. tobacco industry, spokesman Michael W. Robinson said yesterday.

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Lorillard to Webcast Financial Analyst Presentation 

Lorillard Inc., (NYSE: LO), the third largest manufacturer of cigarettes in the United States, today announced that Martin L. Orlowsky, Chairman, President and Chief Executive Officer, and David H. Taylor, Executive Vice President, Finance and Planning and Chief Financial Officer, will host a presentation for analysts focusing on Lorillard's business strategies, operations and financial outlook today at 4:30 p.m. Eastern Time.

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A Decision That May Benefit Both Parent and Spinoff  

Lorillard, the third-largest American cigarette company, had a net income of $898 million last year. Of that amount, $363 million was carried as part of Loews $2.5 billion net income, with the rest credited to the Carolina Group, which until Tuesday had been a tracking stock for the tobacco business. Over the years, Loews has also relied on its cigarette business for a substantial amount of its cash flow, a reliance no longer necessary because of the company’s increasing success in other areas.

The shares that began trading on Tuesday ended their first day up about 6 percent, closing at $76.63.

The Loews chief, James S. Tisch, has said that politics had nothing to do with the company’s decision to spin off Lorillard. And yet the 163-page prospectus for the new Lorillard shares warned investors that company’s heavy reliance on the Newport group could potentially have a negative impact on Lorillard, noting that federal health officials had raised concerns about menthol’s effects. Analysts have said that by removing tobacco from its portfolio, Loews will find borrowing money cheaper.

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RESEARCH ALERT (UPDATE 1) - Analysts upbeat on Lorillard  

Cigarette maker Lorillard Inc, is poised to increase shareholder value, two analysts wrote in research notes released on Wednesday.

Morgan Stanley initiated coverage of the company, whose brands include Newport, Kent and Maverick, with an "overweight" rating and set a 12-month price target of $85. Goldman Sachs added the company to its conviction buy list and increased its price target of the company to $89 from $86.

Lorillard began trading Tuesday on the New York Stock Exchange and was up 39 cents at $77.02

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Lorillard Has Menthol Boost As Cigarette Maker Nears Spinoff 

Lorillard, which is being spun off from Loews Corp., will make its debut at a time when the U.S. tobacco industry is selling fewer cigarettes because of bans on smoking in public places and higher cigarette taxes.

But Lorillard does have one ace up its sleeve: it dominates the market for menthol cigarettes, which have been gaining market share and declining more slowly than other types of cigarettes.

"It's going to be a tough market for all the domestic cigarette companies," says Morningstar analyst Gregg Warren. "Lorillard is on the positive end of the industry dynamics because of the menthol offerings."

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Lorillard Is On Its Own 

Break-ups are never easy as Loews and Lorillard discovered when the divvying up of shares got a little messy.

On Tuesday, Loews said its share exchange offer with former subsidiary, Lorillard, has been oversubscribed. Loews, a conglomeration that operates offshore drilling rigs, hotels and an insurance company, among other ventures, said it would accept 93.5 million shares of Loews stock in exchange for 65.4 million Lorillard shares, reflecting an exchange ratio of 0.70.

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Lorillard stock joins NYSE 

Greensboro tobacco company Lorillard Inc. began trading on the New York Stock Exchange under the stock symbol "LO" today as its own independent company.

Lorillard had been a wholly owned subsidiary of Loews Corp, based in New York, since 1969. Loews issued a tracking stock, Carolina Group, in 2002 tied to the performance of Lorillard in preparation of spinning the company out on its own.

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Loews Corporation Announces Preliminary Results of Lorillard Exchange Offer and Preliminary Proration Factor 

Loews Corporation (NYSE:LTR) today announced the preliminary results of the offer to its stockholders to exchange shares of Loews common stock for shares of Lorillard, Inc. common stock (NYSE: LO) held by Loews. The exchange offer expired at 12:00 midnight, New York City time, on June 9, 2008.

According to the exchange agent, Mellon Investor Services LLC, a total of 173,449,763 shares of Loews common stock were tendered for exchange and not withdrawn prior to the expiration of the exchange offer, including 76,032,420 shares tendered by guaranteed delivery procedures. Loews will accept 93,492,857 shares of Loews common stock in exchange for 65,445,000 shares of Lorillard common stock, reflecting an exchange ratio of 0.70.

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• New York's Tisch family eases away from cigarettes 

Forty years ago, the New York business magnates Laurence Tisch and Preston Robert Tisch capitalized on growing public health concerns over smoking by buying a cigarette company at a bargain price.

It proved a good investment - even if the Tisch name has sometimes been stigmatized, as when an airplane once trailed a banner over Long Island, New York, beaches reading "Larry Tisch sells cancer sticks." The tobacco company's flagship Newport brand flourished, becoming the leading menthol cigarette and No.2 over all, after Marlboro, in large part because Newports are enormously popular among black smokers.

Now, the next generation of Tisches has removed tobacco from the portfolio of the conglomerate they lead, the Loews Corp., spinning it off as a stand-alone business, with the Newport brand representing more than 90 percent of the new company's revenue.

The new stock began trading Tuesday following overwhelming enthusiasm for the offer to trade Loews shares for the new stock. Analysts have said the new standalone company might be a takeover target.

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Loews to accept 93.5M shares tendered in exchange for 65.4M Lorillard shares 

Loews Corp. Tuesday said it will accept 93.5 million shares of its common stock in exchange for 65.4 million shares of Lorillard Inc. common stock, reflecting an exchange ration of 0.70.

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• LETTER: ORLOWSKY: Menthol Cigarettes  

"Opposition to Menthol Cigarettes Grows" (Business Day, June 5) misses the point that the effort to prohibit menthol as a flavoring in cigarettes is but the first leap toward a national ban on all cigarettes.

Almost 30 percent of adult smokers prefer menthol products, meaning millions of Americans would suddenly and arbitrarily be denied their preference of cigarette. They would almost assuredly turn to the black market to obtain the product they want.

History makes clear that prohibitions like this do more harm than good. . . .

Depriving thousands of hard-working Americans -- mom-and-pop convenience stores, tobacco farmers and everyone else in small companies that support the manufacture of menthol cigarettes -- of 30 percent of their business would be disastrous.

Coupled with the fact that the scientific research to date is inconclusive as to whether menthol products are any better or worse than nonmenthol products, it is clear that the advocated ban on menthol cigarettes is misguided and has the very real potential to harm our national and economic security.

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• Lorillard May Be Takeover Target After Spinoff (Update1) 

Lorillard Inc., the cigarette producer being spun off by Loews Corp., may attract takeover bids from Reynolds American Inc. and Imperial Tobacco Group Plc as shrinking U.S. cigarette demand forces manufacturers to combine, according to reports from two analysts.

Lorillard will be spun off June 10 and trade on the New York Stock Exchange. Investors should buy the stock to take advantage of a potential merger, a possible share buyback and its addition to the Standard & Poor's 500 index, Erik Bloomquist, an analyst at J.P. Morgan Securities Ltd., said today in a research note.

``It's very clear the industry will see more consolidation,''

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• Lorillard to Replace Ambac Financial in S&P 500 Index, S&P Says 

Lorillard Inc., the cigarette maker being spun off by Loews Corp., will replace Ambac Financial Group Inc. in the Standard & Poor's 500 Index, S&P said today in a statement posted on its Web site.

The change will take place after the close of trading on June 10, S&P said. Ambac, the second-biggest bond insurer, has lost about 97 percent of its market value over the past year after losses tied to mortgage-related securities.

The addition of Lorillard, the maker of Newport cigarettes, may support its stock price as money managers tracking the S&P 500 purchase the company's shares. Holders of Loews and its Carolina Group tracking stock for the tobacco unit will get shares in Lorillard, New York-based Loews said in December.

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• Is the U.S. Cigarette Industry Going Up in Smoke? 

It has been a difficult year so far for the domestic tobacco firms, which have struggled to balance the retail price of cigarettes with the economic trends affecting many of their core customers. We've been concerned for much of the last year that cigarettes were starting to reach price points at which demand could start to falter, so we weren't too surprised to see volumes decline for all of the domestic manufacturers during the first quarter of 2008. The magnitude of the decline, however, when combined with the economic forces we face today and the potential for increased regulation and excise taxes in the year ahead, has led us to lower our near- and long-term expectations for all three of the U.S. cigarette manufacturers-- Philip Morris USA/Altria (NYSE:MO - News), Reynolds American (NYSE:RAI - News), and Lorillard/Carolina Group (NYSE:CG - News).

Domestic tobacco stocks tend to respond to three main drivers: litigation, industry fundamentals, and changes in the political or regulatory environment. Although the litigation environment has improved substantially during the last five years, leading to a dramatic runup in the shares of Altria (up more than 50%), Reynolds American (200%), and Carolina Group (150%), the specter of multi-billion-dollar lawsuits or settlements has not completely gone away. . . .

we've revised our long-term volume growth expectations for the industry from negative 2%-3% per year to annual declines of 3%-4%. With the economy likely in recession and food and fuel expenditures taking up a larger and larger portion of consumer spending, we expect industry volumes to decline at a slightly greater rate in both 2008 and 2009. With only limited pricing power going forward, we now envision a much different sales and profitability environment for the industry than we did even just a few short months ago.

Of the three domestic cigarette producers we cover, we expect Reynolds to be affected the most, as the company has effectively bet the farm on the success of its three top brands

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Adjusting Vision of Waterfront Arts District to Include High Rises 

A 52-story tower will rise in place of this pile of bricks and rubble.

Across the street from the hulking remains of the Hudson & Manhattan Powerhouse, which once provided electricity for what is now the PATH rail system, is a mountain of bricks and rubble in the middle of a sprawling vacant lot.

Once it was the site of the Lorillard Tobacco and Snuff Manufactory, the largest tobacco factory in the country. Later it was a thoroughly magical warren for hundreds of artists, and the inspiration for an arts district envisioned as a way to revive a decrepit, forgotten warehouse district near the Jersey City waterfront. Current plans call for it to become a 52-story residential tower designed to look like a precarious stack of blocks.

Whether or not you care to see Jersey City as New York's sixth borough, you could write a pretty interesting urban history centered on the 12 or so blocks now designated as its Powerhouse Arts District. . . .

it was a bitterly contested decision by the City Council last month to approve a proposal by the giant home builder Toll Brothers to construct three residential towers of 30 stories or more. . . .

In retrospect, that plan probably died with the pile of rubble at the old tobacco factory when the city -- facing lawsuits from the developer who owned the building, which had since been converted into artists' studios -- allowed him to knock down the building and build a high rise instead. "That was the first domino," said Mr. Kessler. "So now we have Toll Brothers."

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