Sector Snap: Tobacco Makers Gain

Source from:  biz.yahoo.com NEW YORK (AP) Monday March 31 04/01/2008

Tobacco Makers Gain After Altria Spins Off International Cigarette Operations Shares of tobacco companies were mostly higher Monday afternoon after the Altria Group Inc. holding company spun off its international cigarette operations into a separate company, Philip Morris International, while its U.S. counterpart Philip Morris USA sells cigarettes domestically. Newly created Philip Morris International, which began its first day of trading Monday, soared $2.37, or 4.6 percent, to $53.43 by the afternoon. Shares of Altria were essentially flat, gaining 2 cents to $22.78. Analysts from Lehman Brothers and Stifel Nicolaus initiated coverage of Philip Morris International with "Buy" ratings, saying the cigarette maker will be insulated from the threat of U.S. lawsuits and slowing sales. The split of Altria's cigarette operations into foreign and U.S. units frees Philip Morris International from public-relations concerns and possible lawsuits and allows it to concentrate on expanding its line of cigarette products to markets in developing countries. And the breakup also returns Altria to its original focus on its cigarette products, effectively rolling back a strategy to turn the Philip Morris Cos. -- as Altria used to be called -- into a general consumer products company. Altria shareholders received a share of Philip Morris International for every Altria share they owned. Both Philip Morris companies produce Marlboros. The U.S. arm also makes Virginia Slims, Parliament and Basic cigarettes while PMI makes the L&M, Bond Street and other brands. Other tobacco companies made gains on Monday. British American Tobacco added $1.96, or 2.7 percent, to $75.65. Vector Group Ltd. gained 47 cents, or 2.7 percent, to $17.88. The Carolina Group lost 41 cents to $72.94. Reynolds American Inc. dropped 91 cents to $59.79 after hitting an annual low of $59.10 earlier in the session. Enditem