No Smoking at Cigarette Giants' Reunion
Philip Morris and Altria maneuver for a smoke-free future, but not a nicotine-free one.
A Marlboro megamerger craves the smoke-free crowd.
Photographer: Akio Kon/Bloomberg
Philip Morris and Altria, two tobacco giants valued at about $100 billion each, are in talks to merge in what would be the industry’s biggest deal ever. Their goal: join forces to quickly concentrate nicotine addicts around new non-cigarette products before competition heats up or more people quit smoking altogether.
On Tuesday, amid recent M&A speculation, Philip Morris International Inc. confirmed that it is, in fact, in discussions to recombine with its sister company, Altria Inc., from which it was spun off in 2008. The deal, if consummated, would give Philip Morris 58% ownership of the combined entity and would award no premium to Altria shareholders, a person familiar with the matter told Bloomberg News. I’ve written about the merits of a possible transaction again and again and again, and now it may actually happen. The main reasons, in a nutshell, are cash flow and something called IQOS (more on that in a moment).