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MORGAN STANLEY & CO. Two Wall Street New York 5, N.Y. February 15, 1954 Philip Morris & Co., Ltd., Incorporated 100 Park Avenue N ew York 17, N. Y. Attention: Mr. L. G. Hanson, Senior Vice president and Treasurer Dear Sirs: This is in reply to your letter dated February 11, 1954, in connection with the exchange offer made by Philip Morris & Co., Ltd., Incorporated on January 27, 1954., of 443,561 shares of Philip Morris Common Stock in exchange (share-for-share) for an equal number of shares of Benson and Hedges Common Stock. You ask our opinion as to the fair market value per share on January 27, 1954 of su ch a block of additional shares of Philip Morris Common Stock. On January 27, 1951}., 8,200 shares of Philip Morris Common Stock were traded on the New York Stock Exchange at prices ranging from 43 (low) to 43 5/8 (high), with the closing sale of 43. This compares with a volume of 3,000 shares and a closing sale of 43 on January 26, 1954• We understand that a Registration Statement was filed by Philip Morris with the Securiti es and Exchange Commission on January 13, 1951.{4 and became effective on January 26, 1954, but that this Registra- tion Statement contemplated only an exchange offer of Philip Morris Common share s to the Com<non s to ckhol ders o f Benson and Hedg es and no t a public offering of such shares. We believe that if, instead of an ex- change offer under which none of such new shares was to be publicl y mar- keted, a public offering of 443,561 shares had been contemplated and there had been general knowledge thereof, as there would have been, during the registration period of two weeks, the market would have dis- counted this fact and the Philip Morris shares would not have been sel- ling on January 27, 1954 at the prices at'which they actually sold that day, An announcement of, or knowledge of, the proposed sale of such a

MO8OAW STAIVLEY & CO• - 2 - Philip Morris & Co., Ltd., Incorporated February 15, 1954 large block of new shares of common stock or the secondary sale of such a large block of existing shares usually causes the withdrawal of bids on the Stock Exchange with the resulting effect of depressing the price of the shares to some extent between the time of the announcement and the time of the offering. Based on our review of the volume of trading and the prices fo r Philip Morris Common Stock on January 27, 1954 and over a number of days and months preceding that date, it is our opinion that, as of January 27, 1954, Philip Morris would have received a net price of ap- proximately $37.50 per share for the 443,561 shares. This is after taking into consi deration some sell-off due to the announcement of a public offering of this size as well as allowance for underwri ting and selling commissions. We are of the further opinion that the net price per share which would have been received by Philip Morris for a block of l.{00,000 shares would also have been approximately $37.50 per share. The above per share figure, which we believe to be the fair market value per share of such a block of Philip Morris Common Stock on January 27, 1951}., does not take into consideration various out-of-pocket expenses which the Company would have been subject to if such shares had been publicly sold under a Securities Act of 1933 Registration Statement. Very truly yours, ~,„.9,11- 3r l1 .4.