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Is Philip Morris International Walking Back Into More Tobacco Litigation? 

But RBH is facing extensive litigation in British Columbia. While Philip Morris International already has some exposure to the costs of that litigation-because, after all, it owns 40% of RBH-with the acquisition it will be taking on all of the risk. Philip Morris doesn't believe the litigation poses much of a threat. Citigroup's Spielman disagrees.

Spielman also makes the case that the Canadian market isn't an auspicious one for Philip Morris, for several reasons. For one, PMI can't use the Marlboro brand name there . . .

But the bigger issue, Spielman says, is a massive C$10 billion lawsuit brought by British Columbia against the tobacco industry. The province is suing for state-sponsored health-care costs allegedly racked up because of the effects of tobacco products. The suit will be years in development-the trial is to start in late 2010-but it may have a large impact. Spielman chided, "we see it as an attempt by politicians to destroy an industry they regard as immoral. We do not believe it is rational either financially or in terms of public health." Even so, he expects other provinces, including Ontario, to file copycat suits.

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