IS BIGGER BETTER FOR PHILIP MORRIS?
(FORTUNE Magazine) – However enviable his situation otherwise, Hamish Maxwell, chief executive of Philip Morris Cos., faces one of the biggest challenges in corporate America today. The enviable part: He sits atop a corporation ranked tenth in size among the FORTUNE 500 industrials and fourth on our list of America’s most- admired corporations. Philip Morris has won even more fans in the wake of its $12.7 billion acquisition of Kraft in December 1988: Its stock price climbed 23% by mid-April. The challenge: combining the leading U.S. cigarette manufacturer (with 1988 revenues of $25 billion) with the nation’s top producer of packaged foods ($12 billion). Maxwell already faces charges from some quarters that Philip Morris shareholders would have fared better if, instead of buying Kraft, he had doled out the company’s huge $2.7 billion cash surplus as dividends or taken the company private by way of an LBO. Nor does his company have a great record on making its acquisitions work — acqui
