Altria moves in as Wachovia Securities moves out

by Heather B. Hayes
for Virginia Business
October 2007

The old adage that something bad is always followed by something good came to fruition for the Richmond area this summer.

Almost immediately after Wachovia Securities announced that it would eliminate 2,000 of 2,600 jobs in Richmond, Altria Group Inc. said that it will move its corporate headquarters from New York to Richmond after spinning off its international division. Altria’s move would represent the second Fortune 500 to relocate to Richmond in the past two years.

Altria officials said the decision to shift its headquarters would save about $250 million in overhead costs. Philip Morris USA, Altria’s domestic tobacco subsidiary, already is based in suburban Henrico County in a building that once served as the headquarters of Reynolds Metals.

Altria has 600 employees at its New York office, but 400 jobs will be eliminated with the move. The company has not said how many jobs would be added in Richmond.

Philip Morris USA now has about 6,100 employees in the Richmond area, most of them working at the company’s cigarette manufacturing plant in South Richmond. Philip Morris is closing its cigarette factory in Cabarrus County, N.C., and wants to move many of its 2,400 employees there to Richmond.

Altria, which currently ranks 23rd on the Fortune 500 list, would be the eighth Fortune 500 firm headquartered in Richmond. Packaging company MeadWestvaco Corp. moved from Connecticut to Richmond last year and is building a headquarters downtown.

Altria spun off its majority stake in Kraft Foods last March. The company said its decision to make Switzerland-based Philip Morris International an independent company is designed to give it more freedom to pursue sales growth in emerging markets. “I am convinced that this transaction will enhance growth at both Altria and Philip Morris International,” Louis C. Camilleri, Altria’s chairman and CEO, said in a statement.

The plan must be approved by the Internal Revenue Service and the Securities and Exchange Commission. Once it’s completed, Camilleri will take over at Philip Morris International and Michael E. Szymanczyk, who heads Philip Morris USA, will become the new chairman and CEO of Altria.

Wachovia Securities, meanwhile, will begin transferring jobs to St. Louis in the fourth quarter as it merges with A.G. Edwards Inc. Only a few hundred current employees, including upper management, will be asked to make the move. About 600 employees will retain their jobs in Richmond.

Charlotte. N.C.-based Wachovia Corp. announced in May that it was acquiring A.G. Edwards and merging it with Wachovia Securities. The $6.8 billion deal, expected to close in the fourth quarter, will create the second largest brokerage in the U.S. behind Merrill Lynch & Co.