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UST Inc., the smokeless tobacco products maker that Altria Group Inc. bought last week, announced the first 34 layoffs stemming from the shutdown of its Stamford headquarters by year's end.
The company said Monday in a letter to the Connecticut Department of Labor that the 34 people will leave March 18. The firings range from four administrative assistants to UST's vice president, general counsel and assistant secretary and its executive vice president, chief legal officer and secretary. Altria and UST would not identify those who hold the two senior positions to be cut.
"We anticipate additional separations to occur at regular intervals until the facility is closed," UST Vice President Steven Younes said in the letter.
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The headquarters of UST Inc. is slated to leave the city this year after tobacco giant Altria Group Inc. completes its purchase of the smokeless tobacco maker this week, according to sources.
Richmond, Va.-based Altria parent company of Philip Morris USA, will close its $10.3 billion purchase of UST today or Wednesday, Altria spokesman David Sylvia said Monday.
Sylvia declined to comment on whether UST headquarters will remain in Stamford, saying Altria will release more details about the effects of the acquisition after it happens.
A real estate broker who spoke under condition of anonymity said UST might keep a few executives at its leased offices in the High Ridge Park office complex.
The top cigarette company in the nation is also its top seller of smokeless tobacco.
Henrico County-based Altria Group Inc., the parent company of cigarette maker Philip Morris USA, said yesterday that it completed its $10.4 billion acquisition of UST Inc., maker of the top-selling premium moist snuff brands Skoal and Copenhagen.
The acquisition, which includes the assumption of $1.3 billion in debt, gives Altria a leading position in the growing smokeless-tobacco category and a platform for potential growth as cigarette consumption declines in the United States.
Altria has said the smokeless category, worth $3.7 billion in the U.S. in 2007, has grown 6 percent or 7 percent in the past two years.
UST's operating units -- its smokeless-tobacco business and its premium-wine subsidiary, Ste. Michelle Wine Estates Ltd.-- are subsidiaries of Altria, which is planning to cut about $250 million in expenses by combining administrative functions.
The integration plan includes closing UST's Stamford, Conn., headquarters by the end of this year and moving the management operations to Altria's headquarters annex on West Broad Street
Altria Group Inc. (MO) on Tuesday completed its $10.4 billion acquisition of UST Inc. (UST), after lenders requested that the closing take place in early 2009.
The delay, requested in October, reflected turmoil in the credit markets and not the fundamentals of the tobacco industry, an analyst said at the time.
Holders of smokeless-tobacco producer UST's common shares will receive $69.50 a share in cash. UST's common shares will no longer trade on the New York Stock Exchange.
Under the deal, Altria also will assume $1.3 billion of UST debt.
When Altria Group Inc. agreed in September to buy UST Inc. for $10.4 billion (U.S.), it seemed like an obvious combination: largest North American cigarette maker buys largest North American "smokeless tobacco" maker. But while the two companies share one common material--tobacco--cigarettes and chew are otherwise very different businesses. . . .
Few businesses are as profitable as smokeless tobacco. UST dominates the trade in the U.S., with a 73% share of industry revenue and 60% of volume. Its operating profit margin of around 50% is double that of Philip Morris's. Of course, its revenue--estimated to be about $2 billion (U.S.) in 2008--is much smaller. As a result, smokeless tobacco will amount to just 9% of Altria's revenue base once the deal is done. The hope is that smokers will turn to chew when they're unable to light up. . . .
While sales, advertising and display of smokeless tobacco at retail are controlled in Canada, the U.S. does not prohibit the industry's sponsorship of events such as hot-rod racing and bull riding.
In Canada, social conventions are the main constraint on public use (including occasional "no spitting" rules). So far, Yukon, B.C. and Alberta are the only jurisdictions to have banned chew on schoolgrounds.
"The World Health Organization recommended that if you don't have it in your country, don't let it in," says Harvard's Gregory Connolly.
UST Inc. (NYSE: UST) announced that earlier today, during a special shareholder meeting held in New York, a majority of its shares were voted to approve the company's acquisition by Altria Group, Inc. (NYSE: MO).
The transaction, which is expected to close during the first full week of January 2009 and no later than January 7, calls for UST shareholders to receive $69.50 in cash for each share held of outstanding UST common stock. Upon closing, UST will become a wholly-owned subsidiary of Altria. On October 16, 2008, the companies announced that Altria's proposed acquisition of UST passed federal antitrust review.
"We are pleased that an overwhelming majority of shareholders agreed with the Board that this transaction is clearly in the best interests of shareholders," said Murray S. Kessler, UST chairman and chief executive officer. "With federal antitrust review and shareholder approval now secured, we look forward to closing the deal in early January."
he Board of Directors of UST Inc. (NYSE: UST) today declared a regular quarterly dividend of 63 cents per common share, payable December 30, 2008 to stockholders of record at the close of business December 15, 2008.
The company has paid cash dividends without interruption since 1912.
The vast majority of Utah legislators are devout members of the LDS Church, which counsels against the use of tobacco, and the bills they pass often reflect their religious affiliation. But many of these same lawmakers have no compunction about taking money from tobacco companies.
The Altria Group, parent company of the Phillip Morris tobacco conglomerate, just reported to the lieutenant governor's office that it dumped $42,000 into campaign funds this election cycle, covering both 2007 and 2008.
Besides the 31 representatives and eight senators - Republicans and Democrats - who directly benefited, the House Republican Caucus received $2,500, the House Conservative Caucus got $2,500, the House speaker's political action committee got $5,000, the Senate Republican Caucus $5,000, the Salt Lake County Republican Party $3,000, the Utah County Republican Party $2,500, the Utah Republican Party $2,000, the Senate Democratic Caucus $3,000, the House Democratic Caucus $1,500 and Utah Attorney General Mark Shurtleff $3,000.
Talk about hedging your bets. . . .
All that good corporate cheer may be paying off.
Altria was in the process of buying U.S. Smokeless Tobacco Company last legislative session when Rep. Rebecca Lockhart, R-Provo, sponsored a bill to change the way smokeless chewing tobacco was taxed in Utah. Instead of 35 percent of the wholesale price, her bill would tax each can by weight. Since most brands come in 1.2-ounce cans, they all would be taxed the same - 90 cents per can.
That benefited USTC, and its buyer Altria, because they produce Skoal and Copenhagen, the two most popular, and pricey, brands of chewing tobacco. The tax change would reduce the companies' state tax obligation by 15 cents per can, while the cheaper brands made by their competitors would see a tax increase. . . .
Those corporate campaign contributions could pay off in the coming legislative session as well. Rep. Paul Ray, R-Clearfield, has proposed a $1.35 tax increase per pack of cigarettes. And you can bet that legislators voting on that bill who took contributions from Big Tobacco will be reminded of past generosities, and perhaps future expressions of gratitude.
UST Inc. (NYSE: UST) today announced for the third quarter ended Sept. 30, 2008, reported diluted earnings per share was stable versus the prior year period at $.84 and adjusted diluted earnings per share increased 4.6 percent to $.91. Adjustments affecting the comparison in the quarter include acquisition related costs, restructuring charges associated with the company's Project Momentum cost savings initiative, antitrust litigation settlement charges and the net impact related to the sale of the company's headquarters in the prior year period. The table below provides a reconciliation of such non-GAAP financial measures to the most directly comparable GAAP measures.
Smokeless tobacco company UST Inc., the target of a pending acquisition by Altria Group, said Friday that its third-quarter profit fell 6 percent as it spent money on the deal and on a restructuring effort.
UST — which Altria has offered to buy for $10.4 billion — reported net income of $125.3 million, or 84 cents per share, in the quarter that ended Sept. 30. That compares with $133.6 million, or 84 cents per share, a year earlier.
UST Inc., the snuff maker being acquired by Altria Group Inc., reported third-quarter profit that declined less than analysts estimated as promotions helped boost sales of its top-selling Copenhagen and Skoal brands.
Net income fell 6.2 percent to $125.3 million, or 84 cents a share, the Stamford, Connecticut-based company said today. Earnings excluding one-time costs rose 4.6 percent to 91 cents, topping by 1 cent the average estimate of six analysts surveyed by Bloomberg. UST reaffirmed its full-year profit forecast.
Chief Executive Officer Murray Kessler, 49, told analysts today he plans to accelerate promotions during the rest of the year to spur demand amid rising unemployment and a drop in U.S. consumer confidence.
Revenue rose 1 percent to $484.6 million, helped by growth in its Copenhagen and Skoal brands by the middle of the quarter
ITS STRATEGY: The cigarette seller raised prices to offset a 4.8 percent decline in domestic consumption. It also cut operating costs by 43 percent.
PENDING BUYOUT: The company plans to close its $10.4 billion acquisition of smokeless tobacco maker UST Inc. in early January. UST makes Copenhagen and Skoal products.
ITS PEERS: A day earlier, Philip Morris International — spun off from Altria in March — and U.S. rival R.J. Reynolds reported quarterly results that also pleased investors.
* Adjusted diluted earnings per share from continuing operations up 15% to $0.46 versus $0.40 in the third quarter of 2007
* Altria reaffirms its 2008 guidance for adjusted diluted earnings per share from continuing operations in the range of $1.63 to $1.67, representing a growth rate of approximately 9% to 11%, from a base of $1.50 per share in 2007
* Reported diluted earnings per share from continuing operations of $0.42 versus $0.43 in the third quarter of 2007
* Altria's proposed acquisition of UST passes federal antitrust review
* Philip Morris USA's adjusted operating companies income up 6.3% versus the third quarter of 2007
* Marlboro delivers strong retail share gains, up 0.5 share points versus the third quarter of 2007 to 41.6%
Cigarette manufacturer Philip Morris International Inc. (PM: News ), spun-off of from tobacco company Altria Group Inc. (MO: News ), announced Wednesday morning that its third quarter profit rose 20.6% from the year-ago quarter, helped by the impact of favorable currency movements, higher pricing, improved volume/mix and 22% revenue growth.
Revenues were boosted by a double-digit growth across all business segments. Adjusted earnings per share for the quarter rose 19.2% and came in above analysts' estimate. The company also reaffirmed its earnings guidance for fiscal 2008.
October 23, 2008 9:00 am ET
Executives
Clifford B. Fleet – Vice President, Investor Relations
Michael Szymanczyk – Chairman and Chief Executive Officer
David R. Beran – Executive Vice President and Chief Financial Officer
Analysts
David Adelman - Morgan Stanley
Judy Hong - Goldman Sachs
Nik Modi - UBS
Adam Spielman - Citigroup
Ann Gurkin - Davenport
Erik Bloomquist – JP Morgan
[Keela Reed] – Credit Suisse
Thomas Russo – Gardner Russo
[Chris Burrett] – Bloomberg News . . .
Before we get to Altria’s third quarter business results, I would like to first update you on the status of the proposed acquisition of UST.
Altria has fully committed financing to complete the transaction given the current volatile credit markets the total financing charges to close the transaction will be higher than originally anticipated but Altria doesn’t expect this to have a material impact on the financial return of the transaction. However, until Altria completes its long-term financing for the transaction it will be difficult to predict that the UST acquisition will be accretive to Altria’s adjusted diluted earnings per share within 12 months of closing as was initially anticipated.