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Don't want to quit Rothmans? Just say no 

No tobacco company is ever going to score highly on the warm-and-fuzzy scale. But Rothmans took the "only-investors-matter" approach to extremes. With some of the fattest profit margins in Corporate Canada, the company can afford some sweet downtown office space. Instead it occupies a tower in a dumpy part of Toronto, close to nothing. Management does zero to court the press and eschews image makers. The company's head of corporate affairs - a title that in many companies is reserved for a professional spin doctor - is actually an ex-tobacco salesman.

The parsimony extends to how it pays management. . . .

The company is a textbook case of how it's usually better not to dilute a great business by diversifying into other, inferior businesses. (Had some other Canadian consumer firms learned that lesson - Labatt and Molson, we're looking at you - they might have retained their independence.) Rothmans refused to make wacky acquisitions. They simply let the cash pile up. When the pile got too high, they paid it out. You could have bought a share of the company for $8 seven years ago, collected $11.73 in dividends since then, and still own a security that's now worth nearly $30.

This, remember, is in a declining industry. . . .

Philip Morris is not really paying a knockout price. As part of the deal, it also got Rothmans to cancel its dividend, taking $24-million out of shareholders' pockets. (See Andy Willis' Streetwise blog for more on that.)

For investors, replacing Rothmans won't be easy.

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