7/6/2006
The Florida Supreme Court lit up a rally in tobacco stocks when it refused to revive a $145 billion punitive damages award against major cigarette companies.
The long-awaited decision Thursday lifted one of the biggest financial clouds over tobacco companies, slapping down a punishment that the companies had said could send them into bankruptcy.
The state high court’s ruling upheld the key part of a Florida appeals court ruling three years ago that overturned the punitive damages, which at the time had been the largest award in a U.S. product liability case.
Altria (MO). Shares of Philip Morris’ holding company jumped $4.43 to $77.76, accounting for nearly half of the Dow Jones industrials’ gain for the day. Investors hope the verdict clears the way for the company to break its food and cigarette business apart as planned, says Timothy Ramey, analyst at D.A. Davidson.
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