Altria nearer splitting into 2 or 3 companies

April 29, 2005|By CHICAGO TRIBUNE

Altria Group Inc. edged closer yesterday to a possible breakup that would give renewed independence to Northfield, Ill.-based Kraft Foods Inc.

The New York City-based conglomerate owns 85 percent of Kraft.

While declining to provide a timetable, Louis C. Camilleri, Altria's chairman and chief executive, reaffirmed at the company's annual shareholders meeting that Altria plans to split into two or three companies if the "litigation environment" continues to improve.

In Altria's annual report, Camilleri said, "We are preparing for a separation at the appropriate time."

That timing appears to depend on the resolution of three major tobacco cases, including one pending before the Illinois Supreme Court.

Wall Street has been eager for a breakup, speculating that a division into three companies would lead to stock gains. Altria's Philip Morris International subsidiary provides 50 percent of Altria's profits. Kraft provides a little more than 25 percent, and Philip Morris USA provides less than 25 percent.

"Philip Morris International alone and Kraft, under current pricing, could be worth what Altria is trading at today," said Mark Hugh Sam, an analyst with Morningstar Inc. "That is where the value is."

Shares of Altria closed yesteday at $64.47, down 37 cents on the New York Stock Exchange.

The Chicago Tribune is a Tribune Publishing newspaper.

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