Will own 100% of the cigarette business; disengages from interest in E. Leon Jimenez's beer business.
According to Reuters, Altria Group Inc. said on Thursday that its Philip Morris International business plans to change its tobacco and beer equity holdings in the Dominican Republic later this month, leading to a boost in its 2006 forecast.
Philip Morris International holds a 47.5 percent stake in E. Leon Jimenes C. por. A., which has equity holdings in tobacco and beer operations in the Dominican Republic. Philip Morris International plans to exchange that stake for full ownership of E. Leon Jimenes' cigarette subsidiary, Industria de Tabaco Leon Jimenes SA, and about $427 million of cash.
The reorganization is expected to close later this month.
Altria said the deal should add 15 cents per share to net earnings. Altria now expects to earn $5.63 to $5.68 per share this year, up from a prior forecast of $5.48 to $5.53 per share.
On its webpage, The Street.com informs that the Altria Group expects to get the 15-cent boost from reorganizing its holdings in the Dominican Republic. Altria said Thursday that it will exchange Philip Morris' 47.5% stake in E. Leon Jimenes, including a 40% stake in its beer subsidiary, for 100% ownership of ELJ's cigarette subsidiary. Altria, which will no longer hold an interest in ELJ's beer business after the deal, also will pay $427 million in cash.
In turn, TradingMarkets.com refers to this story stating that Philip Morris International Inc., the international tobacco business of Altria Group, Inc., a manufacturer of cigarettes and other tobacco products, on Thursday lifted its earnings outlook for 2006, crediting it to a transaction that reorganizes the company's tobacco and beer equity holdings in the Dominican Republic.
The New York City-based company now expects its net earnings to increase by $0.15 per share. The company sees earnings per share from continuing operations in a range of $5.63-$5.68, up from its previously provided forecast of $5.48-$5.53. On average, 11 analysts polled by First Call/Thomson Financial expect the company to report earnings in the range of $5.25-$5.34 per share, with the consensus being $5.31 per share.
The transaction goes like this: A unit of Philip Morris International has 47.5% interest in E. Leon Jimenes, C. por. A or ELJ, which has equity holdings in tobacco and beer operations in the Dominican Republic. This 47.5% interest in ELJ represents a 40% indirect interest in ELJ's beer subsidiary. The Philip Morris International subsidiary will swap its interest in ELJ for 100% ownership of ELJ's cigarette subsidiary Industria de Tabaco Leon Jimenes, S.A. or ITLJ and approximately $427 million of cash. The cash will be contributed to ITLJ prior to the transaction.
When the deal is completed, Philip Morris International will own 100% of the cigarette business and will no longer hold an interest in E. Leon Jimenez's beer business. The reorganization is expected to close later this month.