Phillip Morris Completes Acquisition

Phillip Morris International (PM) has closed the acquisition of Canadian cigarette maker Rothmans Inc. after receiving Canadian Gov't approval.

Philip Morris said owners of about 47 million shares or 68% of the company, had accepted its offer of 30 Canadian dollars (about $28.16) per share. It will pay for those shares on Friday. They extended their offer by 10 days to allow shareholders to tender remaining shares.

This follows an industry trend of consolidation. Altria (MO) said earlier this month that it would buy smokeless tobacco maker UST (UST). And in January, Imperial Tobacco (IMT) bought Franco-Spanish company Altadis.There is much speculation about a possible eventual buyout of Lorillard (LO), which was spun off from the Loews (L) recently.

In Q2, PM started production of Marlboro cigarettes at two factories in China and have a partnership with the state-owned China National Tobacco, the only tobacco company in the world larger than Philip Morris International itself.

Rothmans owns 60% of Rothmans, Benson & Hedges Inc., which makes and sells cigarettes including Benson & Hedges, Craven A and Mark Ten. Philip Morris owns the remaining 40%.

PM pays 4% dividend and is growing earnings 15% to 20% in a market it has just begun to enter full force. this is one of those "buy it and put it away" investments.


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Disclosure ("none" means no position):Long PM, Mo, none
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