Philip Morris International is in discussions with Altria about a possible all-stock, merger of equals, the tobacco giant announced Tuesday.
An agreement, if achieved, would reunite Philip Morris International and Altria more than a decade after the two companies split. Altria spun off PMI in 2008 and still has a largely US-focused company, selling Marlboro cigarettes domestically while PMI has focused on selling cigarettes overseas.
PMI's shares fell by almost 6% shortly after the markets opened, while Altria's shares jumped by more than 9%. Prior to the announcement, PMI's market capitalization was around $ 1
Analysts have long speculated that the two companies would come together again. The tobacco industry is changing rapidly, and cigarette sales are falling and companies are looking for new growth opportunities.
The PMI in a press release warned that there is "no guarantee that any agreement or transaction will be the result of these discussions. In addition, there can be no guarantee that if an agreement is reached, that a transaction will be completed. "
PMI is investing its future on iQOS, a device that heats tobacco instead of burning it. The Food and Drug Administration cleared PMI to introduce iQOS in the US earlier this year. As part of a previously negotiated deal, Altria will sell iQOS in the United States
Meanwhile, Altria has invested $ 12.8 billion for a 35% stake in Juul, the market-leading e-cigarette company in the United States. Juul is aiming for international expansion, and PMI's expertise can help accelerate growth.
PMI generated $ 79.82 billion in revenue, including special taxes, last year, according to a regulatory filing. Altria had sales of $ 25.36 billion last year.
This is news. Please check for updates.