Philip Morris, R.J. Reynolds Agree to Settlement Talks

Philip Morris Cos. and R.J. Reynolds Tobacco Holdings Inc. said Thursday they have accepted a government invitation to discuss a possible settlement of the Justice Department’s lawsuit accusing cigarette makers of misleading the public on the dangers of smoking.

The two largest U.S. tobacco companies said in separate statements that they continue to believe the lawsuit is without merit and should be dismissed.

R.J. Reynolds, while continuing to deny interest in a settlement, said it’s willing to listen to what the government has to say. Company spokesmen declined further comment, including who would represent them in the talks.

The agreement to meet comes two days after the Bush administration told the tobacco industry it wants to discuss settling the lawsuit. Philip Morris and R.J. Reynolds have expressed support for federal regulation of tobacco, which analysts have said may be a basis for settling.

Susan Dryden, a Justice Department spokeswoman, said the agency has been in contact with the companies and they plan to meet. She declined further comment.

The government claims the tobacco industry engaged in a 30- year pattern of racketeering to mislead the public and Congress about the health effects of smoking. The federal suit originally sought $20 billion in damages.

The Justice Department lawsuit also named Liggett Group Inc., Lorillard Tobacco Co. and Brown & Williamson Tobacco Corp., a unit of British American Tobacco. The Tobacco Institute and the Council for Tobacco Research, two tobacco industry trade groups, also were sued.

Brown & Williamson spokesman Mark Smith said the company had been contacted by the Justice Department about settlement talks. It is “evaluating the situation,” said Smith, who declined to give further details.

A spokesman for Lorillard, a unit of Loews Corp., said the company would be interested in listening to the government’s settlement discussions. Vector Group, which owns Liggett, wasn’t available to comment.

On the New York Stock Exchange, Philip Morris rose $1.16 to $47.66, R.J. Reynolds rose $1.13 to $55.94, Loew’s rose $1.14 to $65.40, and Vector fell 55 cents to $31.30. British American Tobacco’s American depositary receipts rose 7 cents to $15.65 on the American Stock Exchange.