Question about Philip Morris/Altria spinning off Kraft

patswin · Mar 22, 2007

Hey guys

First time in the financial forum. Got a question about something I got in the mail today and thought this might be a good place to ask. I am in a DRP with Altria and have been for almost 10 years. I put a little $$ in the plan each month and all dividends are reinvested automatically. I have built up a nice account since the stock has gone up alot over the last few years.

I got a letter in the mail today that they are spinning off Kraft and giving .69 shares of Kraft for every 1 share of Altria you have. So now I will own some Kraft stock too. Is there any down side to this? I am happy to get the new shares but I wonder could Altria's stock go down now that they are spinning off Kraft or do these things usually not matter much? Is there any down sides to a company doing this?

WorldNumberOne · Mar 23, 2007

its a good thing.

you should go out and buy MO-WI .

that is a stock of phillip morris when issued . basically a phillip morris stock standing alone without kraft .

i think its going for around 64 bucks a share. it will rise ..

patswin · Mar 23, 2007

I did some research last night on yahoo last night. I guess the MO shares will go from $85 to $64 and then I get Kraft shares to make up the difference. When I posted last night I thought I was just getting the Kraft shares as a bonus. I did not realize the MO shares would drop in price also. No free lunch here. Man those yahoo message boards are brutal, people just blast each other in their messages, glad its not like that here at the rx

Dawoofdaddy · Mar 23, 2007

patswin said:
Hey guys

I got a letter in the mail today that they are spinning off Kraft and giving .69 shares of Kraft for every 1 share of Altria you have. So now I will own some Kraft stock too. Is there any down side to this? I am happy to get the new shares but I wonder could Altria's stock go down now that they are spinning off Kraft or do these things usually not matter much? Is there any down sides to a company doing this?

No. If anything, your overall portfolio risk has been greatly reduced.

MO is one of the best managed companies in the world.

Regardless what MO does short/intermediate term, this company is a long term hold and accumulate during any consolidations.