Tobacco

Middleton Sales Team Cut

Philip Morris USA to begin serving cigar customers; no other cuts expected

RICHMOND, Va. -- Three months after completing its purchase of John Middleton Inc., Altria Group Inc.—parent company of Philip Morris USA—will begin recognizing some of the cost savings it predicted at the time as it does away with the duplication in its sales staff.

“Most of the current sales positions at Middleton will be eliminated,” Philip Morris USA (PM USA) spokesperson Bill Phelps told CSP Daily News Friday. “Middleton-designated wholesale and retail accounts that are currently called on by both the Middleton sales force and the PM USA sales force will [image-nocss] be transitioned to the PM USA sales force.”

Phelps added that the company does not anticipate additional employees' jobs will be affected outside of sales.

“Those [employees] impacted by the position eliminations have been informed that they will have the opportunity to interview with PM USA 's field sales force or accept a severance package,” he said. “Beginning this month, John Middleton will make a variety of merchandising and promotional resources available to retailers through PM USA 's sales organization.”

Altria Group Inc. completed the acquisition of John Middleton Inc., a leading manufacturer of machine-made large cigars, from privately held Bradford Holdings Inc. for $2.9 billion in cash in mid-December.

The deal represents a major move into cigars for the parent of Richmond, Va.-based Philip Morris USA.

When the deal was announced in early November 2007, Michael E. Szymanczyk, chairman and CEO of PM USA, said, "The acquisition is both strategically compelling and financially attractive. It fits squarely with our announced strategy to grow our U.S. tobacco business beyond cigarettes and complements our recent initiatives in the smokeless category."

The acquisition is expected to be modestly accretive to New York City-based Altria's 2008 earnings and generate an attractive double-digit economic return.

"While there may be some cost savings, captured predominantly through procurement synergies and the elimination of duplicative expenses, the real appeal of this acquisition is to capitalize on PM USA's sales, distribution and marketing infrastructure and expertise," Szymanczyk said. "Further, PM USA will contribute its strong capabilities, resources and focus on corporate responsibility, including youth smoking prevention."

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