Philip Morris Parent Completes John Middleton Purchase

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Philip Morris Parent Completes John Middleton Purchase

NEW YORK -- After receiving regulatory clearance, Altria Group Inc., parent company to Philip Morris USA, completed the acquisition of John Middleton Inc., a manufacturer of machine-made large cigars, including the Black & Mild brand, from privately held Bradford Holdings Inc.

CSNews Online reported in early November that the $2.9 billion purchase was part of the company's strategy to grow its business outside of the cigarette category.

"This acquisition, which takes place on the eve of Altria Group Inc.'s intended restructuring, is being undertaken to enhance our long-term growth momentum in the U.S. market and create shareholder value," Michael E. Szymanczyk, chairman and CEO of PM USA, said in a statement when the purchase was announced. "The acquisition is both strategically compelling and financially attractive. It fits squarely with our announced strategy to grow our U.S. tobacco business beyond cigarettes and complements our recent initiatives in the smokeless category."

As part of the agreement, John Middleton will continue to operate from its facilities in King of Prussia and Limerick, Pa. Current president of John Middleton, Orrin Ridington Jr., will continue to lead the company's operations and will work closely with the PM USA management team to capitalize on each company’s strengths, while Clinton Price Sr., the current CEO of John Middleton, will retire as previously planned and has agreed to be available in an advisory capacity during the transition period, the company stated in November.

"We look forward to welcoming John Middleton Inc.'s talented employees to the Altria family and to building upon the company's strong growth track record," Szymanczyk added at the time. "The plan is to accelerate the Black & Mild brand's market share growth momentum in the years ahead by leveraging the expertise and capabilities of both John Middleton Inc. and PM USA."

John Middleton's operating revenues are expected to reach $360 million in 2007, with an operating income of $182 million. In 2007, total company cigar volume is expected to reach a level of 1.2 billion units, the company stated in November.

"While there may be some cost savings, captured predominantly through procurement synergies and the elimination of duplicative expenses, the real appeal of this acquisition is to capitalize on PM USA's sales, distribution and marketing infrastructure and expertise," Szymanczyk added. "Further, PM USA will contribute its strong capabilities, resources and focus on corporate responsibility, including youth smoking prevention."