Philip Morris International Inc. Announces Agreement to Acquire Rothmans Inc

Business Wire, July 31, 2008

Revises Second Quarter 2008 Results

Reaffirms Annual Guidance

* PMI to commence a tender offer to acquire all outstanding common stock of Rothmans Inc. for CAD $30.00 per share, an aggregate transaction value of approximately CAD $2.0 billion

* Completion of the tender offer expected by September 30, 2008

* Transaction immaterial to PMI's adjusted 2008 full-year results and modestly accretive to earnings per share in 2009

* Second quarter 2008 results revised to record an after-tax, non-cash charge of $124 million related to the finalization of Rothmans Inc. and Rothmans, Benson & Hedges Inc.'s separately announced settlement with the Government of Canada and all ten provinces

* Second quarter 2008 diluted and basic earnings per share revised from $0.86 to $0.80 and from $0.87 to $0.81, respectively, as per attached schedules

* PMI reaffirms its forecast for 2008 full-year adjusted diluted earnings per share, projecting growth of approximately 19% to 21% to a range of $3.32 to $3.38 from a 2007 pro-forma adjusted base of $2.79

NEW YORK -- Regulatory News:

Philip Morris International Inc. (NYSE / Euronext Paris: PM) announced today that the company has entered into an agreement with Rothmans Inc. (Rothmans) to purchase, by way of a tender offer, all of the outstanding common shares of Rothmans. The agreement and related offer have the full support of the Board of Directors of Rothmans.

Rothmans' sole holding is a 60% interest in Rothmans, Benson & Hedges Inc. (RBH). The remaining 40% interest in RBH is currently owned by PMI and, as a result of this transaction, RBH will become wholly owned by PMI. PMI and Rothmans have been joint shareholders of RBH since 1986.

PMI agreed to make the offer following Rothmans' and RBH's finalization of the CAD $550 million settlement, announced today in a separate release issued by Rothmans, with the Government of Canada and all ten provinces. The settlement resolves the Royal Canadian Mounted Police's investigation relating to products exported from Canada by RBH during the 1989-1996 period.

"This proposed acquisition is a win-win for both Rothmans and PMI shareholders," said Louis C. Camilleri, Chairman and Chief Executive Officer of PMI. "Rothmans shareholders will receive a significant cash premium and PMI consolidates its presence in a market that we deem financially attractive and of strategic importance going forward. The transaction is projected to be modestly accretive to PMI's earnings per share in 2009. We look forward to welcoming the talented management team and employees of RBH into the PMI family and building upon their solid track record of growth," said Mr. Camilleri.

Revision of 2008 Second Quarter Results

As a result of the finalization of the settlement by Rothmans and RBH described above, PMI has revised its second quarter 2008 results to record an after-tax, non-cash charge of $124 million. The charge, which will be included in the operating results of the Latin America segment, represents the present value of PMI's 40% equity interest in RBH's portion of the settlement (CAD $350 million) and will reduce PMI's reported second quarter net earnings by $124 million to $1.7 billion. Diluted and basic earnings per share will be revised from $0.86 to $0.80 and from $0.87 to $0.81, respectively, as per the attached schedules.

Reaffirms 2008 Annual Guidance

PMI anticipates that the transaction will not affect 2008 full-year results and will be modestly accretive to earnings per share in 2009.

Consequently, PMI reaffirms its forecast for 2008 adjusted full-year diluted earnings per share, previously announced on July 23, projecting growth of approximately 19% to 21% to a range of $3.32 to $3.38 from a 2007 pro-forma adjusted base of $2.79.

Transaction

Under the terms of the agreement, PMI will launch a public tender offer to purchase all of the outstanding common stock of Rothmans for CAD $30.00 per share in cash, for an aggregate transaction value of approximately CAD $2.0 billion on a fully-diluted basis. The all-cash offer represents a premium of approximately 16.9% over Rothmans' twenty-day volume-weighted average trading price on the Toronto Stock Exchange through July 30, 2008, prior to the public disclosure of the CAD $550 million settlement reached by Rothmans and RBH with the Government of Canada and all provinces.

The Board of Directors of Rothmans, based on the recommendation of a special committee of independent directors and upon consultation with its financial and legal advisors, has determined that the offer is fair to Rothmans shareholders from a financial point of view, is in the best interests of Rothmans and that Rothmans shareholders should accept the offer and tender their shares. Rothmans has also received an opinion from its financial advisor, BMO Nesbitt Burns (a leading North American financial services provider), that the offer is fair from a financial point of view.

Full details of the offer, and the reasons for the recommendation of the Rothmans Board of Directors that Rothmans shareholders tender their shares, are expected to be mailed to Rothmans shareholders within ten days from the date of this release. A copy of the agreement will also be publicly filed in Canada and made available on SEDAR at www.sedar.com and will be filed by PMI with the SEC in the United States.