Philip Morris (PM)

Another tobacco company was looking to make a move. Philip Morris was an up-and-comer, having grown sales from $179 million in 1946 to $315 million in 1953. But the company could not easily go toe-to-toe with the two giants, and its R&D pipeline was lacking. An alternative path was to buy its way into the fast-growing premium filtered cigarette category.

In late 1953, Tobacco and Allied agreed to sell its majority stake in Benson & Hedges to Philip Morris. The purchase price? $22.4 million, a magnitude more than what Tobacco and Allied initially paid for its stake, paid in full with 367,829 shares of Philip Morris stock. Philip Morris’ holders would approve in April 1954.

The deal received criticism. Philip Morris paid roughly 2x the going industry multiple. Additionally, while the purchase price exceeded $22 million, Benson & Hedges had total assets of only $5.9 million. That’s quite a premium to pay for premium brands. Yet, alongside the brands and all of the production, Philip Morris gained something else deeply valuable yet overlooked: the people. People with ideas, including Joseph F. Cullman III. Parliament would remain successful. But it was merely a precursor and would soon be overshadowed by the most outstanding rebrand of all time.