Canadian Market Will be Testing for PMI

Source from:  tr.itsmyiq.com Aug 5, 2008 08/06/2008

Philip Morris International will find the Canadian market tough going following its takeover of Rothmans Inc, according to a Market Call report by Jonathan Ratner quoting Citigroup's analyst, Adam Spielman. Spielman said the takeover increased PMI's litigation exposure when "arguably the whole point of the spin-off that created Philip Morris was to get away from litigation risk". He then added that "pessimists could argue that the British Columbia and copycat cases are actually more threatening than anything in the US". Spielman mentioned too the fact that Canada was a Virginia market where PMI could not use the Marlboro name because it was owned there by British American Tobacco. He said that sales on the Canadian market, where anti-tobacco regulation was "extremely tough", had been falling consistently since 2003 and that 20 per cent of the market was accounted for by illicit, no-name brands smuggled from First Nation's Reservations. PMI would probably have preferred to buy a cigarette company in an emerging market, Spielman added; so its purchase of Rothmans was an indication of how few attractive targets were out there. Enditem