Law firm won't seek to stop Altria's Kraft spinoff
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NEW YORK, March 21 (Reuters) - Attorneys for plaintiffs in a tobacco liability lawsuit said on Wednesday that they would not seek a court order to try to bar Altria Group Inc.'s (MO.N) spin-off of Kraft Foods Inc. (KFT.N).
Altria's spin-off of its 89 percent stake in Kraft is planned for March 30, a long-awaited separation of the food maker from Altria's Philip Morris tobacco companies. Analysts have said a legal challenge to the spin-off could delay the transaction.
Law firm Cohen Milstein Hausfeld & Toll in Washington, which represents smokers who contend tobacco companies misled them into thinking that light cigarettes were safer than regular cigarettes, said in a statement that it would not pursue a possible injunction against the planned spin-off.
"After intense investigation and attempted coordination with the United States Department of Justice, which declined to move forward on the issue, Cohen, Milstein, Hausfeld & Toll has concluded that there does not appear a sufficiently strong legal basis to justify proceeding against Altria in an attempt to prevent the spin-off," the law firm said.
The law firm said the spin-off could be beneficial to the plaintiffs if they won their lawsuit and sought to recover damages from the company.
The "strength of Altria and its wholly owned subsidiary, Philip Morris USA Inc., will bear directly on the degree to which the company can compensate its victims," the law firm said.
Altria, which is based in New York, declined to comment beyond past statements made by Chairman Louis Camilleri.
"No spin-off to my knowledge has ever been enjoined in corporate America," Camilleri said at a Morgan Stanley conference on Nov. 16.
"Any such injunction would have to be based on a finding that Altria's insolvent -- would be insolvent ex-Kraft or intends to delay, hinder or defraud creditors. We do not believe such a finding can be credibly and fairly made and whilst there are no guarantees, we believe that any such attempts would ultimately fail because the evidence weighs so heavily in our favor," he said.
The spinoff has been awaited since Altria management first raised the idea more than two years ago.
The company held off until it received favorable rulings in several large tobacco liability lawsuits. Altria's predecessor, Philip Morris Cos. Inc., acquired Kraft in 1988 and issued a portion of Kraft shares to the public in a 2001 initial public offering.
Altria shares were down 43 cents at $85.40 on the New York Stock Exchange at midday, while Kraft slipped 13 cents to $31.35, also on the NYSE.
(Additional reporting by Jessica Wohl in Chicago)
((Reporting by Martha Graybow, editing by Maureen Bavdek; Reuters Messaging: martha.graybow.reuters.com@reuters.net; +1-646-223-6133)) Keywords: ALTRIA KRAFT/
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