"Breaking up is hard to do," at least according to Neil Sedaka. For Altria Group (NYSE:MO), however, it's gotten just a bit easier. Thanks to an appeals court ruling that wiped out the federal government's attempts to squeeze big tobacco for $280 billion, and the government's subsequent decision to seek only $14 billion from the companies for smoking cessation and education, the federal racketeering suit against cigarette makers looks just about finished.

That should bring sighs of relief to all tobacco investors. The damages sought now consist of a five-year, $10 billion smoking-cessation program, plus a $4 billion anti-smoking education program spread over 10 years. Splitting the damages between all the defendants -- Altria, Reynolds American (NYSE:RAI), Loews' (NYSE:LTR) Carolina Group (NYSE:CG), Vector Group (NYSE:VGR), and British American Tobacco (AMEX:BTI) -- would amount to little more than pennies per pack, a cost tobacco companies never hesitate to pass along to smokers.

For Altria shareholders, the conclusion of this lawsuit is a major step toward breaking up the company by unloading its Kraft and SABMiller stakes, and perhaps splitting the tobacco business into domestic and international companies. When he announced the breakup plan last November, Altria CEO Lou Camilleri noted that Altria was trading at a 47% discount to the S&P and that the tobacco business was significantly undervalued relative to its peers. Since that time, the stock has jumped 40% to about $65 per share.

While no longer a deep value play, Altria still looks relatively cheap given its dominant position and improving litigation environment. The company trades at an enterprise value of $156 billion, which is roughly 8.5 times trailing EBITDA (a flawed, but nevertheless common, valuation technique). Excluding Altria's 85% stake in Kraft, and 34% ownership of SABMiller, the EBITDA multiple drops to 7.3, putting it between two of its biggest tobacco competitors, Reynolds American (6.6) and British American Tobacco (9.9).

At $65 per share, this consumer giant sports a healthy 4.5% dividend yield. Furthermore, Altria has historically increased dividends every year. After dropping off in 2003, the dividend growth rate is accelerating again, a sign of renewed confidence by the company's management.

There's still smoke in the legal air for Altria given the Illinois Supreme Court's decision to delay ruling in the Price case and an anticipated decision in the Florida Engle case. Resolution of these two suits, which should come before the end of this year, will open the doors to a breakup. Perhaps then, we'll see the true value of this company realized.

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Fool contributor Chris Mallon owns shares of Altria. The Fool has a disclosure policy .