Hamish Maxwell, Philip Morris CEO in Kraft Takeover, Dies at 87Laurence Arnold
Hamish Maxwell, who steered Philip Morris Cos. in its 1985 purchase of General Foods Corp. and 1988 takeover of Kraft Inc., milestones in transforming the tobacco company into a consumer products conglomerate, has died. He was 87.
He died on April 19 at his home in Palm Beach, Florida, his daughter, Graham Russell, said yesterday in an interview. The cause was bladder cancer, diagnosed in December, she said. He also had two residences in New York, in Brooklyn Heights and in Quogue on Long Island.
In 37 years with Philip Morris, culminating with his tenure as chairman and chief executive officer from 1984 to 1991, Maxwell helped the company expand within and then beyond its tobacco roots.
In 1981, he played a key role in helping New York-based Philip Morris beat competitor R.J. Reynolds to acquire a 25 percent stake in Rothmans International Ltd., the British cigarette maker.
As CEO four years later, he dipped into the company’s deep cash reserves to spend $5.8 billion for General Foods Corp., maker of Jell-O, Maxwell House coffee and Birds Eye frozen foods.
Then, in 1988, he led Philip Morris in a hostile bid for Kraft that ended with a $13 billion buyout that created, for a time, the world’s largest consumer products company. In so doing, he achieved what Time magazine called a “coup” with “an unusually smooth resolution” during the height of the leveraged-buyout era.
Philip Morris’s initial $11.5 billion bid -- worth $90 per share -- was rejected by Kraft’s board, which responded with a dividend offer to its shareholders that it valued at $110 per share.
Rather than bid higher, Maxwell attacked the feasibility of the dividend plan and questioned its “real value,” the Times reported.
Kraft’s chairman and CEO, John M. Richman, accused Maxwell of “pressure tactics to buy Kraft on the cheap,” according to the Times. The two executives met in Chicago, where they made peace and, within hours, agreed to a purchase price of $106 per share.
Bruce Wasserstein, who later became CEO of investment bank Lazard Ltd., was chief financial adviser to Philip Morris in the deal.
The merger, which made Kraft General Foods Inc. a unit of Philip Morris, brought together familiar brands including Kraft’s Miracle Whip salad dressing and Velveeta cheese, and Philip Morris’s Marlboro cigarettes and Miller beer.
“Brand loyalty was very important to him,” Maxwell’s daughter said. “So during my teenage years, you only saw Kraft American cheese slices and 7-Up and Miller beer in the ’fridge. It was always a running family joke.”
She said her father was a cigarette smoker until about 10 years ago.
Michael A. Miles, who stayed on as head of Kraft after the acquisition by Philip Morris, succeeded Maxwell in 1991, becoming the first head of the company who lacked a tobacco background.
Philip Morris in 2003 became Altria Group Inc. based in Richmond, Virginia. It spun off Kraft, located in Northfield, Illinois, in an initial public offering in 2001.
“Hamish Maxwell was a tremendous business executive and a true gentleman in every sense of the word,” Martin Barrington, Altria’s chairman and CEO, said yesterday in a statement. “His leadership and vision contributed enormously to building our company and he will be missed.”
Today, Altria is the largest seller of tobacco in the U.S.
Hamish (pronounced HAY-mish) Walter Maxwell was born on Aug. 24, 1926, in Liverpool, England. His father, Alexander Maxwell, known as Sandy, was a tobacco-leaf dealer and the U.K.’s tobacco controller during World War II, and was named to the Order of the British Empire. His mother was the former Doris Galbraith.
He served in the Royal Air Force during World War II and studied at Cambridge University, then took a job with the U.K. travel agency Thomas Cook & Sons, first in London, then in the U.S.
His father helped get him an introduction to Alfred Lyon, head of Philip Morris, which hired him at its Richmond plant. He then worked in New York and, from 1969, in Melbourne, Australia, as head of the Asia-Pacific division of Philip Morris International.
He became CEO of Philip Morris International in 1978.
After his tenure at Philip Morris, he spent five years as chairman of London-based WPP Plc, today the world’s largest advertising agency.
His wife, Georgene, known as Gee Gee, died last year. Survivors include another daughter, Robin Maxwell; his sister, Hilary Harding; and four grandchildren.
Fortune magazine, in 1987, named Maxwell No. 24 on its list of “biggest bosses.” It reported that he didn’t appear troubled by the growing public disdain for cigarette smoking.
“Of course we’re concerned about smoking and health and the public’s perception of the issue,” he said, according to the magazine. “But I have no feelings of guilt, no trouble sleeping at night. There was a time when people thought drinking was much worse a sin than smoking. Both can be abused, but each gives pleasure and has social value.”