In this case, the amount Phillip Morris should be willing to pay is $122.63 per share, which clearly indicates that Kraft's demand for $110.00 per share is a reasonable price. However, in this case, the analysis is performed based partly on the assumption that each CEO's statements can be taken at face value.
When Philip Morris, Esq. opened his retail tobacco shop on London's Bond Street in the mid-nineteenth century, he could never have predicted the century and a half of growth and innovation that was to follow. At the turn of the century, the company he founded was appointed tobacconist to King Edward VII, and in 1902 was incorporated in the United States, where it continued to build its global position in the tobacco business. The companies diversification insures that you have at least 4 or 5 of their products in your home at this very moment. They own general Mills, Kraft and Miller brewing. They make more than cigarettes and are probably one of the most pervasive manufacturing companies in the world.