|
AmBrands to spinoff smokes
|
 |
October 8, 1996: 8:29 p.m. ET
Firm to put tobacco holdings in separate company amid smoking controversy
From Correspondent Allan Dodds Frank
|
NEW YORK (CNNfn) - American Brands' stock jumped 3-5/8 to 48-1/8 Tuesday on news that it will split into two companies in an effort to boost stock and calm investor fears about tobacco litigation.
The company said it will spin-off its British-based Gallaher Tobacco unit on the London Stock Exchange. Its remaining consumer brands will be grouped together in a U.S.-based company that will be renamed.
Gallaher, the leading British cigarette maker, accounted for more than half of American Brands' $11.3 billion in sales last year, two years after it sold its American tobacco company.
U.S. shareholders will receive American depository receipts in a new, independent Gallaher's as well as stock in what is left of American Brands, which will be renamed Fortune Brands.
Ronald Morrow, tobacco analyst at Rodman & Renshaw, said the desire to get more value for shareholders was the main impetus for the deal.
"American Brands management decided that to get better shareholder value, they would need to separate Gallaher -- the big U.K. tobacco company -- away from the rest of the business and let each business be valued in its own right," he said.
With Cobra golf clubs, Titleist golf balls, Moen faucets, Swingline staplers and Jim Beam bourbon, the new company will be a dominant force in almost a dozen consumer product markets.
Thomas Hays, chairman and chief executive officer of American Brands, said many people already use a variety of products the company produces although they may not realize it. (224K WAV) or (224K AIFF)
The company decided to change its name because it feared the old one remained too closely tied with tobacco.
Hays said the company chose Fortune because it's a term synonymous with great prosperity and is also the name of its Australian liquor subsidiary, a division that has proven highly profitable.
|
|
|
|
|
 |
|
