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Big Tobacco Stocks Hold Ground

September 23, 1999

NEW YORK (AP) _ Tobacco stocks held their ground Thursday after being slammed in the previous session after the federal government filed a lawsuit seeking billions of dollars in damages from cigarette makers.

The performance by the two biggest tobacco companies was particularly impressive because the broader market posted big losses Thursday.

Philip Morris Cos. shares were unchanged at $34.50 on the New York Stock Exchange after the biggest cigarette maker lost $1.12 1/2 a share a day earlier.

Shares of R.J. Reynolds Tobacco Holdings Inc., the second biggest U.S. tobacco concern, rose 25 cents a share to $27.56 1/4 after falling $1.18 3/4 a day earlier.

Analysts said Wednesday’s big decline in tobacco stocks reduced prices to levels that some investors found attractive.

They said the industry is expected to fight hard to get the suit thrown out and said it has some persuasive defenses even if the suit goes forward.

The federal lawsuit alleges the companies have conspired since the 1950s to defraud and mislead the public about the health consequences of smoking.

The tobacco companies vowed they would not settle the case out of court.

Company lawyers argued the government has required health warnings on cigarette packs for decades.

Martin Feldman, who follows the tobacco companies for Salomon Smith Barney and has been recommending buying Philip Morris stock, said Wednesday’s selloff was an emotional reaction to the federal lawsuit.

He said Philip Morris was trading far below what the market valued comparable companies not in the tobacco business.

Prices of smaller tobacco companies fell Thursday. Loews Corp., parent of Lorillard Tobacco, was down 18 3/4 cents a share at $71.50, and Brooke Group Ltd., parent of Liggett Group, fell 43 3/4 cents a share to $17.31 1/4.

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