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Altria to shed stake in Kraft in March

February 01, 2007|From the Associated Press

NEW YORK — Now that Altria is poised to jettison its Kraft Foods subsidiary, investors expect the payoff will be a higher share price as the company transforms into almost purely a tobacco company.

New York-based Altria Group Inc., whose tobacco operations make the top-selling Marlboro cigarette brand, plans to spin off its majority stake in Kraft Foods Inc. in March.

That will leave Altria consisting primarily of tobacco units Philip Morris USA and Philip Morris International and a stake in beer maker SABMiller.

Altria's announcement Wednesday had been widely anticipated as the first step in a restructuring plan designed to make the company more valuable to investors. Some market watchers believe Altria's share price has not benefited as much as its should from a rise in the tobacco sector this year.

"2007 is poised to be a key year in the evolution of our company," Chief Executive Louis Camilleri said.

The spinoff could be halted or at least stalled if plaintiffs in cases pending against the company seek a court order to stop it. Analysts have said such an effort is unlikely to succeed.

Kraft Foods, the second-largest food and beverage company in the world, sells products such as Kraft cheese, Oreo cookies and Maxwell House coffee.

The distribution of Altria's 89% stake in Kraft to Altria's shareholders will be made March 30 to shareholders of record as of March 16. Altria will distribute about 0.7 of a share of Kraft for every one share of Altria.

Kraft, based in Northfield, Ill., has been trading on its own since a 2001 public offering that left Altria with a majority stake.

Altria said the split boosts Kraft's ability to make acquisitions, allows managers to focus on their businesses and gives both firms greater debt capacity.

Altria shares slipped 15 cents to $87.39. Kraft shares rose 9 cents to $34.92.

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