Altria, Philip Morris Discuss Reunion Merger: Analyst Says Deal Makes 'Strategic Sense'


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Cigarette maker Philip Morris International Inc. (NYSE: PM) said Tuesday it's in discussions about the possibility of reuniting with industry leader Altria Group, Inc. (NYSE: MO) in a possible blocbuster all-stock merger that would create a massive $200-billion-plus company.

Altria spun PM off more than a decade ago, and the two companies sell the same cigarette brands, with Altria in the U.S. market and Philip Morris selling them in other international markets. Among their brands: the American cigarette icon Marlboro.

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Both companies have seen declining sales as tobacco use has shrunk in the United States, and faced pressure from alternatives including e-cigarettes.

Significant Uncertainty

The breakup was a success for shareholders of both companies, but RBC Capital Markets analyst Nik Modi said in a Tuesday note to investors that the last two years "have created significant uncertainty, and the future of tobacco is a lot more dynamic than it was in 2008," when the breakup occurred.

"Given the changing global consumption/regulatory landscape, we believe it makes strategic sense for the Marlboro, IQOS and JUUL brands to have a unified global strategy run by one company," the analyst said. 


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RBC has an Outperform rating on Altria with a $68 price target.

Not A Done Deal

PM said in a statement that any transaction, which isn't a done deal, would be subject to approval of both comapnies' shareholders and boards, as well as regulators. 

Price Action

Altria shares were down 2.44% at $45.97 at the time of publication, while Philip Morris shares were falling by 4.55% to $74.19.

Related Links:

The Positives, Negatives Of Altria's $12.8-Billion Investment In Juul Labs

Tobacco Stocks React As FDA Investigates Reports Of Seizures After Vaping


27% profit every 20 days?

This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.


Posted In: Analyst ColorM&ATop StoriesAnalyst RatingscigarettesE-CigarettesNik ModiRBC Capital Marketstobacco