Altria plans to unload unit of Philip Morris
Altria Group Inc. 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 Jan. 30.
Altria Chief Executive Louis C. Camilleri would become CEO of Philip Morris International once the spin-off is completed. Philip Morris International’s current CEO, Andre 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.
The company plans to close its New York City headquarters as part of the spin-off, helping save at least $250 million in overhead costs annually, Camilleri said. Altria’s offices would be moved to Richmond, Va., where Philip Morris USA is based, along with some jobs. Philip Morris International would maintain a small office in New York. About 400 of 600 New York employees would lose their jobs, Camilleri said.
The proposal must be cleared by the Internal Revenue Service and the Securities and Exchange Commission, the company said.
A spin-off of Philip Morris International would be the latest step in a restructuring process started in March when Altria 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 being wound down, and a 29% stake in London-based SABMiller, 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.
Sales at Philip Morris International are more than double those at the U.S. unit, with 2006 revenue at $48.3 billion compared with Philip Morris USA’s $18.5 billion.
Last year, Philip Morris International sold 831 billion cigarettes, making it the world’s largest nongovernment tobacco company in terms of volume. It holds 15.4% of the global market and its growth is expected to continue at a healthy clip.
Altria shares rose 73 cents to $69.80.
