Altria Group Inc (MO)

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Are tobacco giants Philip Morris and Altria negotiating a merger?
By: Alphastreet | August 26, 2019

Shares of tobacco giant Philip Morris International, Inc. (NYSE: PM) traded sharply lower Monday afternoon, before closing the session down 4.3%. While the actual cause for the unusual movement remained unclear, speculation was rife that the selloff was spurred by reports saying that the company and its rival Altria Group (MO) are in merger talks.

On the other hand, Altria shares stayed in the positive territory throughout the day, after opening the session higher. Interestingly, there was no specific information to explain the contrasting behavior of the stocks. While the merger theory has been doing the rounds for a long time, Altria’s interest in smoke-free cigarette brand iQOS – developed recently by Philip Morris – gives it a new perspective.

Confirming its outperform rating on Philip Morris and reiterating the $102 price target, Wells Fargo in a research note issued on Monday attributed the stock’s movement to rumors of the company’s possible combination with Altria.



There is enough reason to believe that these days the general market sentiment is not in favor of Philip Morris, mainly due to lack of transparency in its strategy to move away from conventional cigarettes to smokeless alternatives. Recent studies have found that most of the smoke-free tobacco products are not as safe as they are made out to be.

However, recent data show that Philip Morris’ shift to smokeless products has been well received so far. Last month, the company reported in-line revenues for the second quarter, with the only segment that recorded year-over-growth being Heated Tobacco.

Shares of Philip Morris closed Monday’s session down 4.3% and continued to lose during the after-hours trading session. Meanwhile, Altria ended trading up 1.5%.

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