Lights Ruling Imminent
Illinois Supreme Court to decide tomorrow on PM USA case
CHICAGO -- The Illinois Supreme Court is scheduled to rule tomorrow on a $10.1 billion verdict against Philip Morris USA in a case in which the largest U.S. cigarette manufacturer was found to have deceived smokers into thinking "light" cigarettes were healthier than regular smokes, said Reuters.
The initial $10.1 billion judgment in the class-action case was handed down against the unit of Altria Group Inc. by a trial court judge in March 2003. The Supreme Court took the unusual step of bypassing the appellate court and hearing the case on appeal directly [image-nocss] from the trial court. Arguments were heard in November 2004, and investors and analysts have been awaiting a ruling since.
The case is one of the major legal issues that Altria Chairman Louis Camilleri has said needs to be resolved before the company executes plans to break Altria into two or three separate companies, splitting Altria's Kraft Foods Inc. business from the U.S. and international tobacco units.
The scheduling of the ruling could give Altria's shares a lift even before the actual ruling is released Thursday, Bonnie Herzog, tobacco analyst at Citigroup Investment Research, said in a research note. "We believe the probability that Philip Morris wins the appeal is over 75%," she said. "Therefore, we recommend investors maintain a long position in the stock heading into a decision, since we expect the upside in the stock could be over 10% on Thursday."
Altria stock has gained 22% over the past year, in part because of anticipation of the possible breakup of the company once the U.S. litigation landscape clears.