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The "Farmers Insurance News-Alert" website is dedicated to providing the consumer and general public with detailed information concerning the Farmers Insurance Group. This includes fraud reports, consumer complaints, lawsuit's and other legal actions taken against this company. All information contained herein is for educational purposes only. Original sources, when known are sited.

 

U.S. Tobacco Company Shares Rise After Senate Rejects Bill

New York, June 18 (Bloomberg) -- Shares of U.S. tobacco companies rose after the U.S. Senate rejected a tobacco bill that the cigarette companies said would have bankrupted them.  

Philip Morris Cos., RJR Nabisco Holdings Corp. and Loews Corp., the three biggest U.S.-based cigarette companies, are seen benefiting from the Senate vote late yesterday. The legislation would've raised federal cigarette taxes more than fourfold in less than five years, leading to sharp declines in smoking.  

The legislation also would have increased regulation of the industry, restricted marketing and advertising, and cost the companies at least $516 billion over 25 years. The prospect of tobacco legislation had pushed down tobacco stocks about 25 percent the past year.   

There seems to be some upside for tobacco stocks. We think Philip Morris is very cheap,'' said Michael Sandler, a principal at Pacific Financial Research Inc., which held 9.5 million shares of Philip Morris as of March.  

Shares of industry leader Philip Morris, which makes Marlboro cigarettes, rose 1 7/8 to 40 5/16 in midmorning trading of 7.8 million, making it the second most-active U.S. issue.   

RJR, whose brands include Winston and Camel, rose 7/8 to 25 3/16, while Loews gained 3/8 to 90 7/16. Standard & Poor's index of tobacco companies rose 4.7 percent, the largest increase among S&P's industry groups.  

Still, tobacco companies face hundreds of lawsuits, including almost 40 filed by state attorneys general seeking reimbursement for health-care costs spent treating sick smokers. And with the end of the tobacco legislation, which would have capped the amount the industry would pay each year in damages to smokers, the industry has no guarantee that a series of huge jury verdicts won't bankrupt some of the companies.  

That bill is dead but the issue is not buried,'' said Andrew Darke, an analyst at Williams de Broe in London.  

The American depositary shares of London-based B.A.T Industries Plc rose 7/16 to 19 9/16. B.A.T, the world's second- largest cigarette maker, owns Louisville-based Brown & Williamson Tobacco Corp., the third-largest U.S. cigarette company.  

Democrats in the Senate said they would push to pass some kind of legislation to curb smoking, particularly by children. President Bill Clinton and others in the anti-smoking lobby blamed the tobacco companies' multimillion-dollar advertising campaign for the bill's failure. The bill's opponents, including Mississippi Republican Trent Lott, said the bill had become a big government, tax-and-spend measure.  

The Senate vote came after the U.S. stock market closed.  

The bill, sponsored by Arizona Republican Senator John McCain, effectively replaced the tobacco industry's $368.5 billion agreement with state attorneys-general last June to settle their legal liabilities. 

10:27:53 06/18/1998

 

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