New Philip Morris leaders upbeat about challenges

June 22, 1994|By Bloomberg Business News

NEW YORK -- Upbeat and outspoken in the face of intense pressure, Philip Morris Cos.' new leaders said yesterday that they are confident of winning looming legal battles in defense of their top product, tobacco.

But in a news conference on their second full day in their new jobs, Chairman R. William Murray and Chief Executive Geoffrey C. Bible told reporters a split of the company's food and tobacco operations was unanimously rejected by the board last month, largely because of anticipated legal challenges.

The plan was dropped for the "foreseeable future" in part because executives considered it likely that plaintiffs in tobacco liability lawsuits would claim such a split was a fraudulent way to shield assets, said General Counsel Murray Bring.

Mr. Murray and Mr. Bible said they will talk this year with the Philip Morris board about expanding the company's stock buyback program, increasing the dividend and making strategic acquisitions in an effort to boost the company's lagging stock price.

"All of you know that at this time we've shelved plans to split the food business," Mr. Murray said.

"But we continually evaluate different structures for our company. I want to say categorically that we are not committed to doing things the way they were done in the past."

Mr. Murray and Mr. Bible met the press yesterday before flying to Chicago on the first leg of a trip to meet with many of the company's 190,000 employees. This week, they also will talk with analysts.

And next month, both men will see a vocal group of big shareholders that have been advocating a split as a way to free the value of the company's Kraft General Foods and Miller Brewing subsidiaries from concerns about the future of its U.S. tobacco operations.

The meeting will take place in New York on July 13 and will include representatives of the International Brotherhood of Teamsters, the California Public Employees' Retirement System and others. The shareholders will continue to argue for a split, said Bill Patterson of the Teamsters.

Philip Morris shares closed up $1 yesterday at $51.75.

"Our first priority will be to grow our businesses at rates that compare favorably to the rest of corporate America," Mr. Murray said. "It's an overriding objective for us."

As a second priority, he said, "We want to improve stockholder returns and stockholder value. That's a very, very important task for our new management."

As one way to increase sales, Mr. Bible said the company was looking at "tack-on" food acquisitions internationally and tobacco purchases in central and eastern Europe. The company also is considering expanding its Miller Brewing unit through purchases minority stakes in international brewers, he said.

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