Separation Anxiety

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Separation Anxiety

Analysts told Forbes this week that Altria Group and Kraft Foods will firm up spin-off plans in late January. Altria, parent company of tobacco giant Philip Morris, is moving closer to the split after a favorable court ruling this week.

The final decision and its timing will be discussed at a shareholder meeting on Jan. 31, 2007. "Having first publicly discussed the restructuring of the company two years ago, this is the right time to move forward," Louis Camilleri, Altria's chairman, told Forbes.

The parent company wants to separate its Kraft Foods unit from its other business segments, making it wholly independent. The restructure also allows Altria to streamline operations and focus only tobacco-related products, the report said.

"They don't need the distraction of restructuring a packaged food company," Raymond Mathis, analyst for Standard & Poor's Equity Research, told Forbes.

The positive court ruling, made Tuesday at the Second Circuit Court of Appeals, gave the tobacco industry a stay in its appeal of a class action lawsuit that alleges that the companies, including Philip Morris, mislead consumers with their marketing of "light" cigarettes as healthier than regular ones, the report stated.

"The lawsuit isn't seeking damages for injuries," Mathis told Forbes. "It's seeking reimbursement because they said they wouldn't have smoked light cigarettes."