Philip Morris plans IPO for Kraft Foods

Associated Press

NEW YORK — Philip Morris Cos. Inc. indicated yesterday it could raise up to $9.5 billion in its planned sale of stock in its Kraft Foods division in one of the biggest initial public offerings in the United States.

Kraft Foods is the nation's biggest food company, including Oscar Mayer meats, Maxwell House coffee, Kraft and Velveeta cheese, Ritz crackers and Oreo cookies.

Philip Morris, which also owns the biggest tobacco company and the top-selling Marlboro cigarette brand, said it plans to sell 280 million Class A shares of Kraft stock, for between $26 and $31 each, before July 1.

According to a filing with the Securities and Exchange Commission, the number of shares being sold could rise by 28 million if demand is strong. The prices per share estimated in the filing could change before the sale.

But those numbers indicate Philip Morris could raise between $7.3 billion and $9.5 billion in the sale. The biggest IPO to date in the United States was last spring's $10 billion-plus offering of stock in AT&T Wireless.

Philip Morris has been planning the Kraft offering since last summer when it announced it was buying Nabisco Holdings Corp. for what eventually amounted to $15.2 billion.

It intends to use proceeds from the Kraft IPO to retire some of the $11 billion in debt resulting from that deal, completed late last year.

Philip Morris said it expects the offering to be completed by the end of the second quarter of 2001.

The company expects Kraft shares to be traded on the New York Stock Exchange and has applied to use the KFT symbol.

The combined Kraft Foods and Nabisco operation had sales of $34.7 billion in 2000, which made it the nation's biggest food company and second worldwide only to Nestle SA of Switzerland.