NOVEMBER 5, 2004
Marlboro parent to split up?
The Altria Group, the parent company of Ferrari's title sponsor Marlboro, could be split into two or three different companies. The world's largest cigarette maker also owns a variety of other businesses, notably Kraft Foods, but the continuing tobacco litigation has dragged down the stock price and chief executive Louis Camilleri says that splitting up the businesses would be a sensible move. The share price rose 8.5% as a result of his remarks.
Camilleri said that spinning off the other companies would increase their value. The shares are currently trading at $54 but analysts say they are worth up to $80m if the companies were split and shareholders given equivalent stock in the newly formed units.
None of this is likely to have any effect on the Ferrari sponsorship as this is not expected to continue beyond the end of 2006 when a voluntary agreement between the tobacco companies kicks in to stop sports sponsorship. In addition there are various different forms of legislation which kick in at the end of 2006 which make tobacco sponsorship more trouble than it is worth.
In recent months there seems to have been a move by tobacco companies away from pushing the laws to the limit for fear that this will incite governments to introduce even harsher anti-tobacco laws, such as a ban on cigarette vending machines.
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