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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.

 

B.A.T shares bask as tobacco bill dies

By Louise Ireland

LONDON, June 18 (Reuters) - Shares in B.A.T Industries Plc reflected the market's relief on Thursday over the death of the the landmark McCain tobacco bill in the U.S. Senate overnight.

B.A.T stock rose 2.3 percent or 13p to 584p after tobacco stocks powered ahead in the U.S. in reaction to the news, with Philip Morris gaining nearly five percent.

"This has got to be good news for B.A.T. The tobacco industry warned that the bill had threatened bankruptcy and this leaves room for a slimmed-down bill," said CSFB analyst Nyren Scott-Malden.

The bill had threatened the U.S. tobacco industry with a settlement estimated at $500-$850 billion. U.S. tobacco companies said earlier this year that they could no longer support the legislation which would have raised cigarette prices by $1.10 per pack over five years.

B.A.T's Brown & Williamson subsidiary is the third-largest tobacco company in the U.S. after Philip Morris and RJR Nabisco Holdings .

B.A.T called the bill's failure good news for the U.S. tobacco industry and said it might bring "more sanity" into the smoking debate.

But a spokesman said it was too early to say what effect the bill's failure would have and that it was "indicative of a chaotic performance in the Senate."

"Our reading is that the bill is effectively dead," the B.A.T spokesman told Reuters.

This was good news for the industry, he said, but added that "little constructive" had emerged from the U.S. government process.

The bill's sponsor John McCain, an Arizona Republican, said he was pessimistic about resurrecting tobacco legislation this year, although some Senate conservatives who opposed him spoke of trying to put together a narrower bill.

The vote was the second in a complicated two-part procedural move to get the bill off the floor, allowing the Senate to go on to other business after a month-long stalemate.

McCain's bill went far beyond what the industry agreed with the Clinton administration in June last year, in what was planned as a historic deal to settle states' tobacco-related health claims in return for future immunity.

The U.S. tobacco industry now faces a raft of piecemeal litigation from a horde of claimants.

"They've avoided a ruinous bill but they have not put a lid on litigation and they now face the uncertainty of piecemeal cases from claimants," said ABN AMRO Hoare Govett analyst David Ireland.

"The U.S. tobacco majors would certainly want to remove the climate of uncertainty hanging over their shares," said Ireland.

But analysts agreed the industry was better off now the bill had failed.

"Not all states will win, not all will sue and some have already had their case thrown out," said a third analyst.

U.S. tobacco profits are about a third of B.A.T's total tobacco profits and tobacco overall represents 60 percent of B.A.T's total profits.

06:16 06-18-98

 

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