Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, March 2, 1995                   TAG: 9503020060
SECTION: BUSINESS                    PAGE: B-8   EDITION: METRO 
SOURCE: Associated Press
DATELINE: NEW YORK                                 LENGTH: Medium

GOODBYE TO POISON PILL

The $65 billion food-tobacco conglomerate, which makes products ranging from Marlboro cigarettes to Jell-O desserts, became one of the biggest companies to date to scrap its shareholder-rights plan or so-called poison pill defense, a vestige of the hostile takeover era that prevailed during the late 1980s.

Some big Philip Morris shareholders who had been pushing the company to dismantle the plan said it had insulated management and depressed the company's stock price.

``This is a very big shareholder victory,'' said William Patterson, a Teamster union pension fund advisor who led opposition to the poison pill. ``They are going to have to be more receptive to shareholder opinion.''

In trading on the New York Stock Exchange, Philip Morris rose 121/2 cents a share to close Wednesday at $60.871/2.

Teamster pension funds own about 3.4 million shares of Philip Morris stock, and have been among those pushing Philip Morris to take steps to shield its food and beverage business from the potential liability of tobacco operations.

Philip Morris said its board decided to redeem the pill and would pay its shareholders about $8.7 million for rights awarded under the poison pill plan.

Such plans give shareholders the right to buy more shares at a bargain price should an unwanted suitor acquire more than a specified stake in a company. That creates more shares and boosts the price of a buyout.

In the headiest days of hostile takeover activity last decade, some buyers would acquire a sizable minority stake in a company and then press other shareholders to sell on less-favorable terms.

Poison pill plans were adopted in part to force suitors to deal with the board, which would try to negotiate terms or find an alternative plan that was in the best interests of all the shareholders and treated them equally.

Philip Morris adopted its poison pill in October 1989 but Chairman and Chief Executive Geoffrey C. Bible said the ``takeover environment has changed dramatically'' since then.

As a result of the board's decision Wednesday to repeal the poison pill, Philip Morris shareholders will get a onetime payment of 1 cent per share.

The company had 867 million shares outstanding at the end of 1994.

The penny a share will be added to the company's regular quarterly payment of 82.5 cents a share that will be made April 10.