Altria Group Inc.’s spinoff of Northfield-based Kraft Foods Inc. will occur before the end of May, UBS Securities LLC predicted Thursday. The firm also increased its price target on Altria shares by 16 percent, to $94.
Splitting off Altria’s international tobacco unit from Philip Morris USA will probably happen in the middle of 2008, UBS also predicted in a report.
Altria, parent of the world’s largest cigarette-maker, plans to decide Jan. 31 exactly when to spin off Kraft, and investors expect a split of its U.S. and international tobacco units to follow.
“The sum-of-the-parts valuation on Altria is north of $100, and that’s conservative,” said Charles Norton, a portfolio manager of GNI Capital Inc.’s Vice Fund in Dallas. “You have the prospects of a wave of consolidation.”
UBS said it increased its Altria price target to reflect the value of Kraft–the world’s second-largest food firm–Philip Morris USA and Philip Morris International once they’re separated. Altria declined to comment on the UBS report.
Citigroup Inc. analyst Bonnie Herzog wrote in a recent note to investors that Altria could separate Philip Morris International by the end of 2007.
Altria shares rose 21 cents, to close at $89.40 on the New York Stock Exchange. Kraft shares closed at $35.78, down 12 cents.
