GREENSBORO, N.C. - Altria Group Inc., the world's largest tobacco company, will spin off its overseas unit on March 28, bowing to US investors demanding higher dividends and share buybacks.
Shareholders will get one Philip Morris International share for each Altria share, the New York-based company said yesterday. The company also reported that fourth-quarter profit from continuing operations fell 9.1 percent because of falling US cigarette shipments and a year-earlier gain.
Chief executive Louis Camilleri will take charge of the Lausanne, Switzerland-based overseas division and accelerate growth into emerging markets as smoking bans spread in Western Europe. Philip Morris USA will focus on snuff to counter falling American cigarette sales. The two companies will repurchase a combined $20.5 billion in stock over two years.
"The spinoff is a lever to maximize the value of Altria," said Matt Kaufler, who helps manage $2.6 billion at Clover Capital Management. The Rochester, N.Y.-based firm owned 265,688 Altria shares through December.
After Altria's spinoff of Kraft Foods Inc. last March, investors including Gardner Russo & Gardner's Thomas Russo and Brian Barish of Cambiar Investors LLC said they favored a split of the US and overseas tobacco units.
"The stocks of the respective businesses can reflect their own fundamentals," Barish said yesterday. He oversees more than $8 billion, including 4.5 million Altria shares.
Overseas growth may accelerate, Barish said, as Philip Morris International "enters some of the big populous countries like China and India and Indonesia."
Camilleri told analysts yesterday the company will start making and selling Marlboro cigarettes in China in the first half of 2008. Philip Morris International will also distribute Chinese-made cigarettes outside of the world's largest tobacco market in an alliance with China National Tobacco Corp., the state-run monopoly.
