❗Let's close the gap: We still need your help to raise $40,000 by April 1. Donate now

Kraft, Philip Morris splitting up?

Janet Babin Aug 30, 2006
HTML EMBED:
COPY

Kraft, Philip Morris splitting up?

Janet Babin Aug 30, 2006
HTML EMBED:
COPY

TEXT OF STORY

MARK AUSTIN THOMAS: Sometimes corporate marriages just don’t work. Today the Board of Directors of Altria Group will ponder that possibility. Altria is the parent company of Kraft Foods and cigarette-maker Philip Morris. There’s a growing feeling among shareholders that the two companies should be separated. Janet Babin tells us why.


JANET BABIN: Kraft’s cream cheese may go well on its Ritz Crackers, but many investors don’t think the company goes well with its corporate sibling Philip Morris.

They say the threat of more tobacco lawsuits makes Kraft stock unattractive to other potential investors. Gregg Warren is an analyst with market research firm Morningstar:

GREGG WARREN:“As long as Kraft is part of that conglomeration, any sort of tobacco litigation issues or tobacco settlements that have to be paid out are going to impact the firm as a whole.”

Philip Morris spends several billion dollars each year paying off a major tobacco settlement with the Federal government. And Altria spends an additional $500 million on other tobacco litigation.

While Warren says a breakup is part of Altria’s game plan, he doesn’t expect it to come today.

He says if Kraft were to spin off now, Altria could be accused of purposely moving assets to Kraft to keep them out of any new tobacco settlement.

I’m Janet Babin for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.