Altria Group said Wednesday it would spin off its international tobacco business on March 28, freeing it to pursue cigarette sales more aggressively outside the U.S. by separating it from its American counterpart.
The two tobacco units each make Marlboros, one of the world’s top-selling cigarette brands.
The details of the spinoff, tentatively approved by the Altria board last August, were announced as the company reported that fourth-quarter profit fell 26% from year-earlier results.
Lausanne, Switzerland-based Philip Morris International has said that it would rank as the biggest non-governmental cigarette maker in the world, behind the state-owned China National Tobacco. PMI makes Marlboros, L&M and Bond Street cigarettes, while Philip Morris USA makes the Marlboro, Virginia Slims, Parliament and Basic brands for U.S. consumers.
The separation could shield Philip Morris International from U.S. legal and regulatory issues, such as pending legislation to restrict tobacco advertising, regulate warning labels and remove hazardous ingredients.
Critics of the spinoff say it gives the international unit the chance to unleash its marketing on nonsmoking women and children in poor, developing countries.
Once the spinoff to Altria shareholders is complete, New York-based Altria will consist mainly of its domestic cigarette business, Philip Morris USA, and a 28.6% stake in London-based beer company SABMiller, which makes Miller Genuine Draft, Pilsner Urquell and Snow.
The plan to give PMI its independence is part of a multiyear restructuring that started with the spinoff of Altria’s majority stake in Kraft Foods Inc. in March of last year.
The company also announced fourth-quarter results on Wednesday. Net income fell to $2.19 billion, or $1.03 per share, from $2.96 billion, or $1.40 per share in the prior year quarter.
Due to growth of the international business, revenue rose 14% to $18.23 billion from $16.03 billion in the fourth quarter of 2006.
