Archived Issues

Altria could split into three units

Altria chairman and chief executive Louis Camilleri said in early November that the company has begun preparing for a possible split in order to maximize shareholder value. Camilleri said the company would need “a victory” or a favorable resolution in several litigation cases before the company would split. However, he said, the company is optimistic that the long-term trend in tobacco litigation is one of improvement.

Bonnie Herzog, tobacco analyst for Smith Barney, says, “We believe that the board of directors must approve the breakup into three separate entities—a domestic cigarette company [Philip Morris USA], an international cigarette company [PMI], and Kraft Foods [KFT].”

While sales have been rising for PMI and are steady for Kraft, Philip Morris USA’s sales have been declining. Herzog says, “We feel that the management must separate the U.S. tobacco business from its international one in an effort to once and for all force the market to value the U.S. business appropriately.”