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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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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,''
Lorillard Inc., the oldest U.S. cigarette company, will be spun off by Loews Corp. as New York's billionaire Tisch family capitalizes on rising prices for tobacco stocks.
Holders of Loews and its Carolina Group tracking stock for the tobacco unit will get shares in Lorillard, whose brands include Newport and Kent, the New York-based company said today. . . .
``Tobacco is not a strategic asset for us,'' said Loews Chief Executive Officer James Tisch in an interview. ``The company can do better as an independent.''
The spinoff of Lorillard should improve Loews's ``risk profile in the eyes of rating agencies and equity investors,'' he said in a conference call with investors and analysts.
Loews Corp. said on Monday that first-quarter profit rose 42 percent, topping Wall Street estimates, helped by better-than-expected results from its insurance, tobacco and oil drilling units.
Net income at the New York-based conglomerate, which is run by the billionaire Tisch family, rose to $768.3 million from $541 million a year earlier. . . .
Profit at the Lorillard Inc. tobacco unit rose 26 percent to $188.7 million. Profit attributable to shareholders of Carolina Group, a tracking stock for Lorillard, rose to $1.08 per share from 86 cents. Analysts expected 98 cents.
Net sales rose 7 percent to $913 million. A December cigarette price increase and lower marketing costs offset higher litigation costs and a 0.9 percent decline in unit sales volume.
Lorillard Chief Executive Martin Orlowsky said on the call that U.S. market share rose to 9.95 percent from 9.62 percent a year earlier. Lorillard brands include Newport, Kent and True.
Loews' ratings upgrade reflects operating earnings and market share recovery at Lorillard Inc. (Lorillard), Loews tobacco subsidiary, and the reduced litigation risk of the U.S. tobacco industry. Lorillard is the most significant operating earnings and cash flow provider to the company. . . .
The Florida Supreme Court agreed to hear the plaintiffs' appeal and heard oral argument in November 2004. While a decision is expected in the near term (issued on Thursdays), Fitch does not see a high likelihood of near term financial risk in this case. Nonetheless, if the Florida Supreme Court rules in favor of the defendants, plaintiffs could seek review by the U.S. Supreme Court.
Judge Kessler's decision in the DoJ case is expected in the near term following the conclusion of the trial in June 2005 and post-trial motions through October 2005. . . .
Beyond these legal issues, there are a number of continuing negative pressures on the industry including extensive smoking bans which dampen demand, rising excise taxes which continue to raise per pack costs and reduce pricing flexibility, and a competitive operating environment. Overall domestic consumption continues to decline at low single digit levels annually
Today, Cong. Dave Camp, (R - Michigan), Chairman of the House Ways & Means Subcommittee on Select Revenue Measures, heard testimony from economists and U.S. business leaders regarding impediments created by the current federal tax code. The Subcommittee also heard proposals on how to strengthen and simplify the federal corporate tax system to create jobs at home and to increase U.S. competitiveness abroad.
One prominent panelist James S. Tisch, is President and CEO of Loews Corporation (NYSE: LTR; CG), a large holding company based in New York City. Loews either owns or is a majority shareholder in six separate and unique businesses, including commercial property & casualty insurance, tobacco, offshore oil drilling services, interstate natural gas pipelines, hotels, and watches.
Mr. Tisch addressed the historically high corporate capital gains tax rate, which currently is at 35%. "U.S. corporations pay one of the highest rates of tax in the entire world. By lowering the rate on corporate capital gains, you would unleash a huge amount of capital into the economy, which would fuel domestic job growth as the new capital infusion generates ever more efficient capital deployment." . . .
Tisch also announced that he will spearhead an effort along with like-minded business leaders to form a coalition called "America Gains" to educate policy makers and the public about this problem, and to "put corporate capital gains reform at the forefront of federal tax reform."
Preston Robert Tisch, a billionaire businessman, former Postmaster General and prolific philanthropist who since 1991 owned half of the New York Football Giants, died Tuesday night at his home in Manhattan. He was 79 and had been receiving treatment for an inoperable brain tumor diagnosed in August, 2004.
The emotional reaction across the business, social, political, sports and entertainment worlds reflected the broad scope of his life, as well as the friendly demeanor that was one of his trademarks. . . .
The brothers bought Loews Theaters in 1959 and in 1971 added Lorillard Tobacco, prompting a change in the company name to Loews Corporation. By 2003, with Bob Tisch as its chairman, Loews had revenues of $16.4 billion and assets of more than $77 billion.
Duke University Medical Center has received a $10 million gift from the Preston Robert Tisch family of New York, N.Y., to support cancer research at the Brain Tumor Center at Duke and the Duke Comprehensive Cancer Center, Victor Dzau, M.D., chancellor for health affairs and president and CEO of the Duke University Health System, announced Wednesday. This is the single largest gift ever received by the Duke Comprehensive Cancer Center.
Preston Robert Tisch is chairman of Loews Corporation and chairman and co-owner of the New York Giants football organization.
Of the $10 million gift, $5 million will be used to fund basic and translational research of promising new brain tumor drugs and to support brain tumor clinical trials. This gift, in part, extends the translational program that Accelerate Brain Cancer Cure (ABC2) created with Duke in 2002 to accelerate potentially life-saving drugs from the laboratory to the clinic in an effort to save patients with brain tumors.
The other $5 million will be used to create the Preston Robert Tisch Cancer Investigators' Fund, which will be used to recruit promising new cancer researchers to Duke. Duke University Medical Center will contribute an additional $5 million toward the Investigators' Fund.
In recognition of the gift, the Brain Tumor Center at Duke will be renamed The Preston Robert Tisch Brain Tumor Center at Duke.
"The benevolence of the Preston Robert Tisch family will have an enormous impact upon the search for new brain tumor treatments and we are indebted to them for their generosity," Dzau said. "Their contribution will enable Duke to recruit and retain the brightest researchers and will create tremendous promise for all cancer research at Duke."
a great humanitarianHenry Friedman, M.D., co-leader of the Brain Tumor Center at Duke University, on Robert Preston Tisch, Chairman of Loews Corp., which owns Lorillard Tobacco.
Loews Corp. (NYSE:LTR) on Thursday said fourth-quarter profit fell at its cigarette operations as the maker of Newport and other brands spent more to promote its products and net sales dropped.
Carolina Group (NYSE:CG) tracks the results of Loews' Lorillard Inc., the No. 4 U.S. cigarette maker. Loews said Carolina's net income, after deducting profits attributed to Loews, was $34.8 million, or 74 cents per share, compared with $36.9 million, or 92 cents per share, a year earlier.
Analysts had expected 63 cents to 68 cents per share . . .
"Tobacco has been threatened by deep discounters. Lorillard is disadvantaged because it is small and lacks merchandising power, but is advantaged because Newport has a strong niche position as a menthol brand, and deep discounters haven't moved into that area," said Christophe Razaire, senior credit officer, Moody's Investors Service
Loews Corp.'s sale this week of 15.7 million shares in the tracking stock for Lorillard Inc. may boost the cigarette company's flagging share price in the near term and may later set the stage for a full spinoff, analysts said.
"This transaction causes us to question the future of Carolina Group (the name of Lorillard's tracking stock) and the intentions of the parent company," said Bonnie Herzog, tobacco analyst with Citigroup Smith Barney, in a note to investors. "Although we do not believe it will happen in the near future, we would not be surprised if Carolina Group would be a free- standing stock one day."
The possibility that Greensboro-based Lorillard would become its own, independent company has been on the mind of Wall Street analysts since Carolina Group debuted on the New York Stock Exchange in February 2002. Loews, a New York conglomerate with stakes in insurance and oil drilling, among other ventures, raised $980 million in the Carolina public offering.
Laurence A. Tisch, 80, the billionaire co-founder of Loews Corp. who upset the media and entertainment worlds with his cost-cutting at CBS, died Nov. 15. He had been suffering from cancer, a spokeswoman said.
Mr. Tisch, a private man who built a financial empire in the very public worlds of media, hotels, insurance and tobacco, slashed costs and made a fortune. . . .
In 1960, at the start of an urban real estate boom, they acquired Loews Theatres.
Eight years later, Loews Corp. acquired Lorrillard Inc., the tobacco manufacturer, and dramatically improved the company's financial performance. . .
Mr. Tisch was also known for his philanthropy, with major donations to the Metropolitan Museum of Art, New York University, the NYU Medical Center and the Wildlife Conservation Society. He also served as chairman of the board of trustees at NYU from 1978 to 1998 and was a former president of the United Jewish Appeal of New York.
Self-made billionaire Laurence A. Tisch, the Loews Corp. co-founder who built an enormous financial empire that began with a single New Jersey resort, died Saturday in Manhattan. He was 80.
Tisch, who also spent nine tumultuous years as the head of CBS Inc., died at about 1 a.m., said Candace Leeds, a Loews spokeswoman. Tisch was suffering from cancer, she said.
"Mr. Tisch's presence, and his wise and valuable guidance, advice and business acumen, will be sorely missed by his friends and colleagues at Loews Corporation and throughout the many spheres of commerce, education and philanthropy he touched," Loews Corp. said in a statement.
At Loews, Tisch oversaw a financial corporation with assets of over $70 billion, including a hotel chain, a tobacco company, an insurance firm and an offshore drilling company.
Carolina Group CG.N , the tracking stock for Loews Corp.'s LTR.N cigarette operations, on Thursday reported a sharply lower second-quarter profit, as sales of its largest brand, Newport, fell.
The results, which were well below Wall Street estimates, sent shares of Carolina Group, which tracks the results of Loews' Lorillard Inc., the No. 4 U.S. cigarette maker, down more than 16 percent.
"Investors are likely to be disappointed by the earnings miss," said Goldman Sachs analyst Judy Hong. "We believe that increased competition in the U.S. cigarette market may have finally compelled (Carolina Group) to put substantially more discounting behind Newport."
Lorillard, maker of Newport, the No. 2-selling cigarette brand in the nation, is using New York City's exorbitant tax rate to link cigarette taxes with organized crime. . .
What Lorillard's campaign fails to acknowledge is that cigarette smuggling isn't a product of high taxes but of disparate taxes. The problem isn't New York City, it's Virginia, where the tax is only 2 1/2 cents per pack. We could cut smugglers' gains just as easily - and more profitably for the states - by raising taxes in Virginia and Delaware as by cutting them in New York. . .
The truth is that raising Delaware's per-pack tax from 24 to 50 cents per pack will deter smugglers from using Delaware as a nearby source, forcing them to travel to Virginia to preserve their profits. That should make interrupting their supply line easier. Yet, the price difference between Delaware and Virginia will be too small, and Delaware is too insignificant a market to make selling bootlegged cigarettes a lucrative criminal enterprise here.
If Lorillard really cared more about snuffing out smuggling than preserving its own profits, the company would encourage all states, including Virginia, to boost cigarette taxes to $1 a pack.
First-quarter profit for Carolina Group CG.N , a tracking stock for the tobacco operations of conglomerate Loews Corp. LTR.N , rose although sales declined and volume slipped for most of its cigarette brands, including Newport, Loews said on Thursday.