MINNEAPOLIS (AP) — A tobacco analyst said Tuesday he expects the Minnesota lawsuit against the tobacco industry to be settled as early as this weekend for as much as $5 billion.
“We’ve talked to people on both sides,” said Gary Black, an analyst for Sanford C. Bernstein & Co. in New York. “Both sides seem to indicate that they’re not that far apart.”
Black said issues that need to be resolved for a settlement include whether Minnesota would get more money than other states got in settlements and what would become of Blue Cross and Blue Shield, the state’s co-plaintiff. He predicted the industry would settle with the state, and the state would reimburse Blue Cross for its claim.
“My guess is you’ll see it by next week, maybe by the weekend,” he said.
Lead plaintiffs attorney Michael Ciresi denounced Black’s claim.
“Gary Black, to suggest he’s talked to anyone on the plaintiffs’ side, is a flat-out lie,” Ciresi said, then joked: “Unless he found a state employee in Waseca or Willmar or Duluth and asked them what they thought.”
Eric Johnson, a top aide to Attorney General Hubert Humphrey III, questioned the credibility of the source.
“Gary Black has been predicting settlement in Minnesota for the last eight months and for eight months Gary Black has been flat-out wrong,” Johnson said.
He said Black and Sanford Bernstein have a financial interest in driving up tobacco companies’ stock through talk of a settlement.
“Between now and the end of the trial, this desperate industry is likely to make overtures for a settlement,” Johnson said. “But they should know by now that Attorney General Humphrey is not going to compromise his goals.”
Johnson declined to confirm or deny settlement discussions.
“If the industry makes overtures that still fall far short of our goals, we’re not going to dignify it by calling it settlement negotiations,” Johnson said.
Ciresi repeated his long-standing refusal to discuss whether settlement talks were taking place.
“They can deny all they want, but if there’s a settlement next week, they’re going to have to backtrack a little,” Black said. “I believe there are talks going on despite what Humphrey has to say.”
Black said his firm follows Philip Morris Inc., RJR Nabisco Inc., and smokeless tobacco maker UST Inc. and said it has “buy” recommendations on all three. But he rejected Johnson’s suggestion he had a financial interest in a settlement.
“I’m not doing a good job, am I? They’re (tobacco stocks) not doing very well.”
Stock in Philip Morris closed Tuesday at $37.50 per share, down almost $8 from the last trading day before the trial started. Shares in RJR Nabisco, the parent of R.J. Reynolds Tobacco Corp., were at $28 Tuesday, down more than $8 since before the trial.