Thursday, August 30, 2007
Regulatory and legal issues in the U.S. are forcing the
spin-off.
NEW YORK (AP) — Altria Group plans to spin off its Philip Morris International tobacco unit, a move designed to give the overseas maker of Marlboros and other cigarette brands more freedom to pursue sales growth in emerging markets.
The plans announced Wednesday would leave Altria with its much smaller domestic tobacco business that nonetheless still ranks as the biggest in the United States.
The spin-off would clear the international tobacco business from the legal and regulatory constraints facing its domestic counterpart, Philip Morris USA.
The company’s board announced it would finalize its decision and give the exact timing of the spin-off at its board meeting on Jan. 30.
Altria Chief Executive Louis C. Camilleri will become the new CEO of Philip Morris International, once the spin-off is completed. PMI’s current CEO André Calantzopoulos has agreed to become its chief operating officer and president.
Succeeding Camilleri at Altria would be Michael E. Szymanczyk, the current CEO of Philip Morris USA.
NYC plan
The company plans to close its New York City headquarters as part of the spin-off plans, helping save at least $250 million in overhead costs annually, Camilleri said on a conference call. Altria’s offices will be moved to Richmond, Va., where Philip Morris USA is based, along with some jobs. PMI will maintain a small office in New York. About 400 of 600 current New York employees will lose their jobs, Camilleri said.
The proposal must be cleared by the Internal Revenue Service and the Securities and Exchange Commission, the company said in a statement.
A spin-off of PMI would be the latest step in a restructuring process started in March when New York-based Altria Group Inc. spun off its majority stake in Kraft Foods Inc.
In addition to the tobacco businesses, Altria owns Philip Morris Capital Corp., a finance company that is currently being wound down, and a 29 percent stake in London-based SABMiller PLC, which brews Miller Lite beer.
Under a spin-off, Altria shareholders would get shares in a stand-alone Philip Morris International.
Executives at the international cigarette company’s Lausanne, Switzerland, headquarters oversee operations in more than 160 countries.