Loews to offload cigarette division

Loews Corp said on Monday that it planned to spin off its Lorillard Inc cigarette unit, whose brands include Newport, Kent and Maverick.

The spinoff would be accomplished by swapping shares of Loews' Carolina Group, which tracks the performance of the company's cigarette assets, for new common shares in a separate Lorillard entity.

Loews, whose businesses include financial, energy, hotel and watch-making companies, is a New York-based conglomerate run by the Tisch family.

"Over the past several years, the tobacco business has not been a primary focus for Loews," Chief Executive James Tisch said. He added that the deal would improve the company's risk profile.

The deal calls for the exchange of one Lorillard common share for each Carolina Group share. Carolina shareholders would hold about 62 percent of Lorillard.

The remaining 38 percent of Lorillard stock could be exchanged for shares of Loew's common stock if the company believes market conditions are acceptable.

Loews expects to complete the Lorillard spinoff in mid-2008, and the cigarette company's stock would trade on the New York Stock Exchange.

"We have no plans to dispose or distribute any other subsidiaries that we own," Tisch said.

Lorillard generated a record $233.6 million in earnings during the third quarter.

Martin Orlowsky will remain chairman, president and CEO of Lorillard, Loews said.

On the call, Orlowsky said Lorillard would adopt a dividend payout ratio more in line with its US peers. He also said he was still in the process of formulating the soon-to-be independent company's financial strategy.

Agencies

(China Daily 12/19/2007 page16)