Kraft Foods' stock fell Thursday despite a court ruling that removed a multibillion-dollar cloud from its parent company and majority owner...
CHICAGO — Kraft Foods’ stock fell Thursday despite a court ruling that removed a multibillion-dollar cloud from its parent company and majority owner, Altria Group, as Wall Street took a bearish view of Kraft’s looming spinoff.
The ruling by the Illinois Supreme Court, which tossed out a $10 billion verdict against Altria’s cigarette division, helps clear the way for Altria to spin off Kraft and make other long-planned divestitures once two other pending cases are resolved. Altria had signaled it would not proceed with the spinoff until the legal cases were resolved. Analysts say the separation could happen as soon as mid-2006.
Investors pushed down shares in the nation’s largest food manufacturer by 27 cents, to a close of $28.67 Thursday. That was near its 52-week low of $28.03 and down 9 percent since it started trading 4 ½ years ago.
Analysts attributed the sell-off to Wall Street’s belief that many Altria shareholders will dump Kraft shares that they receive in a spinoff, with the market lukewarm toward the packaged-foods industry. Large food manufacturers have struggled recently amid high energy and commodity costs and competition with private-label goods.
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Kraft, the maker of Oreo cookies, Nabisco crackers, Oscar Mayer meats and Post cereals, has operated and traded separately from Altria since going public in June 2001 but remains 85 percent owned by the parent firm.