Philip Morris and Altria in merger talks as e-cigs light up | Progresiv
Marlboro maker Philip Morris International Inc said it was in talks to reunite in a merger with Altria Group Inc following its 2008 spin-off, as the tobacco giants seek to pool resources in the fast growing e-cigarette market. 
The merger between the two companies, the biggest ever in the consumer sector and the fourth-largest deal of all time, would create a tobacco giant with a market capitalization of approximately 200 billion dollars.
It would come two years after British American Tobacco Plc bought out Reynolds American Inc for 49 billion dollars, underscoring how the decline in cigarette smoking globally is pushing tobacco companies to seek scale and pool resources in their development of alternative products.
Under the terms of the all-stock merger being discussed, Altria shareholders would receive no premium and own between 41% to 42% of the combined company, with Philip Morris shareholders owning the remainder, according to a source familiar with the matter who was not authorized to discuss the details publicly.
The board of the combined company would be split evenly between Philip Morris and Altria directors, the source said. If the deal negotiations prove successful, an agreement could be reached by the end of September, the source added.
The two U.S.-headquartered companies separated 11 years ago to focus on different geographic markets, at a time when tobacco stocks generated steady yields. Since then, the industry has been disrupted by a move away from traditional smoking into e-cigarettes and vaping.
The two have responded with new offerings. Philip Morris, which operates outside the United States, has developed a heated tobacco product called iQOS. Altria, which operates in the United States and still sells Marlboro in the country, acquired a 35% stake in vaping company Juul Labs Inc last year for 12.8 billion dollars.
Philip Morris and Altria see scope in consolidating their manufacturing operations to generate annual synergies of more than 800 million dollars, according to the source.
Industry-wide cigarette sales volumes tumbled 4.5% on an adjusted basis in 2018, according to analysts at Cowen. Global sales of cigarettes were estimated at 714 billion dollars last year, according to Euromonitor International. (www.reuters.com)
