Philip Morris Adopts Poison Pill Defense

Philip Morris Companies Inc. today announced it has adopted a poison pill defense against unfriendly takeover attempts.

Philip Morris said it was not aware of any takeover attempt but said the plan will guard against “abusive tactics to gain control of the company without paying all shareholders a premium value.”

Philip Morris is the world’s largest tobacco company. It also owns Kraft, General Foods and Miller Brewing Co., making it the world’s largest consumer products concern.

Shareholders will receive one common share purchase right for each share they own. Under certain conditions the right entitles them to buy shares of an acquiring company or of Philip Morris itself at a discount.

The board of directors of Philip Morris, if it approves of a takeover offer, can annul the rights at any time by redeeming them at 1 cent apiece.

“The rights will not prevent a takeover but should encourage anyone seeking to acquire the company to negotiate with the board prior to attempting a takeover,” Hamish Maxwell, board chairman and chief executive, said in a statement.

Critics of poison pills and other defensive measures say they insulate management and can prevent takeovers that would be good for shareholders.