NEW YORK (AP) — Loews Corp., a conglomerate with interests in financial services, hotels and watches, said Monday its board approved a spinoff of its interest in Lorillard Inc., one of the nation's largest cigarette makers, into a separate publicly traded company.
Lorillard makes Newport, True and Kent cigarettes. Loews, which is led by the Tisch family, owns CNA Financial Corp., Loews Hotels, Bulova Corp. and Diamond Offshore Drilling Inc.
After the spinoff, Lorillard will remain headquartered in Greensboro, North Carolina, and Martin Orlowsky will remain as president, chairman and chief executive of the tobacco business.
Loews' interest in Lorillard will be spun off to Carolina Group shareholders and Loews shareholders in a tax-free transaction, the company said. Carolina Group is a tracking stock designed to reflect the performance of the tobacco business.
Under terms of the deal, Loews will redeem all outstanding Carolina shares in exchange for Lorillard shares. Carolina stockholders will get one Lorillard share for each share they own. The Lorillard stock being distributed makes up about 62 percent of the company's outstanding shares.
Loews will then sell the remaining 38 percent of Lorillard outstanding stock in exchange for some of its own outstanding shares if deemed appropriate. If Loews does not view this as a proper transaction, it will distribute the remaining Lorillard stock to Loews shareholders as a dividend.
The spinoff is expected to close in mid-2008, subject to conditions including a favorable Internal Revenue Service ruling, Securities and Exchange Commission clearance and an opinion on the deal's tax-free status by the tax counsel. The deal does not need Loews shareholder approval.