Industry-leading tobacco and cigarette businesses Philip Morris and Altria have recently been in talks about a potential blockbuster merger. The two companies had previously split 11 years ago to separate their international and domestic operations. Philip Morris currently has a market value of nearly $116 Billion, while Altria is hovering around $86 Billion. This deal could possibly be the largest merger since the AT&T-Time Warner merger of 2016.
The potential transaction would give Philip Morris approximately 58% ownership of the new company. Altria has been making huge strides in the e-cigarette business, most notably with their $12.8 Billion investment in Juul. Wells Fargo analyst Bonnie Herzog said, “Juul would have an ideal partner for its international expansion in Philip Morris”. This merger would serve as a strategic move for each company to diversify their product offerings and capitalize on the rapidly growing e-cigarette market. Shares of Philip Morris have dropped about 4% in response to the news, while Altria shares have seen a slight uptick.
2 thoughts on “Philip Morris and Altria Discuss Potentially Reuniting”
Only opinion on this is that in the future they may possibly get burnt. Taking into consideration the lack of studies on Juul and E-cigarettes in the long-term, with this merger may also come lawsuits. The health risks with those cancer sticks are tremendous and they haven’t been around long enough to really see the effect. #TheBear
Valid points Smokey! From a business perspective, this merger should solidify the firm as the undisputed alpha in an enormous and growing industry with many barriers of entry. Their products will surely provoke some scrutiny, but they are two innovative companies that are looking at a near stranglehold of the global market for tabacco-related products.