Eric:
Back when I held RN and there was an attempt to force RJR to
split off Nabisco from the tobacco side, the board convinced us
that the time was wrong and that if a split was done at that
time, the lawsuits would hang over both stocks. That supposedly
is why they did the Nabisco IPO--the legal department concluded
that a Nabisco that was spun off could still be considered liable
but that a Nabisco IPO would be an "innocent" new class of
shareholders. Personally, I don't see what difference it makes
but these companies pay those legal eagles a fortune to study
all the loopholes.
To my knowledge, Philip Morris has never publicly stated that they
intend to do a tobacco split from the other businesses but I'm sure
they've considered and rejected that for the same reasons--it seems
that MO and RN, as the two biggest and therefore the two with the
biggest clouds over them, are acting pretty much in unison.
As for the negative announcements, I still can't see why it should
make any difference since we aren't learning anything we didn't
already know.
I mean--how could those guys tell the Congressional committee that
tobacco is not addictive and say it with a straight face.
Also, much of the negative sentiment is certainly reflected in the
stock prices. We still hold one tobacco stock, Imperial, that we
got as a spin-off from Hanson but Hanson did the spin-off as a part
of a complete restructuring of the parent and, therefore, is not
carrying the tobacco liabilities with it.
Imperial, meanwhile, is suffering the same drop in valuations as
MO and RN because the British are jumping on the same bandwagon
as the Americans. Note that even the smokeless stocks like UST are
also suffering the same troubles. |
