Philip Morris, Altria merger talks ignite 11 years after split

Philip Morris International and Altria Group are in talks to merge, more than 11 years after the two firms split.

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Philip Morris confirmed on Tuesday that it is in discussions with Altria Group regarding a potential “all-stock, merger of equals.” The company said a deal has not been completed and may not be reached. Altria, which spun off Philip Morris in March 2008, sells cigarettes in the U.S. while Philip Morris is focused overseas.

Following the news, Philip Morris shares were under pressure while Altria was sharply higher.

TickerSecurityLastChangeChange %
PMPHILIP MORRIS INTERNATIONAL INC.80.55+0.70+0.88%
MOALTRIA GROUP INC.44.33+0.05+0.11%

"While we haven't heard any specific news to explain the moves, we believe it could have to do with renewed speculation about a PM/MO combo – a call we first made in December 2016 and we still very much believe will happen especially considering MO's stake in JUUL and iQOS," Wells Fargo analyst Bonnie Herzog said in a Monday note to clients. "Also, we find it curious that PM recently announced they will no longer be presenting at the upcoming Barclays consumer conference next week."

The potential deal comes as the two companies have been looking for ways to diversify their businesses away from relying on cigarettes. At the end of last year, Altria made two investments to help steer business in a different direction. In November, the company paid $12.8 billion for a 35 percent stake in the e-cigarette maker Juul. A month later, it paid $1.8 billion for a 45 percent stake in the Canadian cannabis company Cronos.