Philip Morris International confirms it's in merger talks with Altria - CNBC

Philip Morris International is in discussions with Altria about a possible all-stock, merger of equals, the tobacco giant announced Tuesday.

A deal, if one is reached, would reunite Philip Morris International and Altria more than a decade after the two companies split. Altria spun off PMI in 2008 and has remained a largely U.S.-focused company, selling Marlboro cigarettes domestically while PMI has focused on selling cigarettes overseas.

PMI's shares dropped by almost 6% shortly after the markets opened, while Altria's shares jumped by more than 9%. Prior to the announcement, PMI's market value stood at around $121 billion while Altria's outstanding stock was valued at roughly $88 billion. 

Analysts have long speculated the two companies would come back together. The tobacco industry is rapidly changing, with cigarette sales falling and companies searching for new avenues of growth.

PMI in a press release cautioned there is "no assurance that any agreement or transaction will result from these discussions. Additionally, there can be no assurance that if an agreement is reached, that a transaction will be completed."

PMI is betting its future on iQOS, a device that heats tobacco rather than burning it. The Food and Drug Administration cleared PMI to introduce iQOS in the U.S. earlier this year. As part of a previously negotiated deal, Altria will sell iQOS in the U.S.

Meantime, Altria has invested $12.8 billion for a 35% stake in Juul, the market leading e-cigarette company in the U.S. Juul has its sights set on international expansion, and PMI's expertise could help accelerate its growth.

PMI generated $79.82 billion in revenue, including excise taxes, last year, according to a regulatory filing. Altria posted $25.36 billion in sales last year.

This is breaking news. Please check back for updates.

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https://www.cnbc.com/2019/08/27/philip-morris-international-confirms-its-in-merger-talks-with-altria.html

2019-08-27 13:27:55Z
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