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Philip Morris, Altria end merger talks; Juul names Altria exec as CEO

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Philip Morris, Altria end merger talks; Juul names Altria exec as CEO

Philip Morris International Inc. and Altria Group Inc. announced Sept. 25 that they have ended their discussions for an all-stock merger of equals.

"After much deliberation, the companies have agreed to focus on launching IQOS in the U.S. as part of their mutual interest to achieve a smoke-free future," Philip Morris CEO André Calantzopoulos said in a statement.

IQOS is a heated tobacco product manufactured by Philip Morris, which the company said has received premarket authorization from the U.S. Food and Drug Administration and is safe for public health.

Meanwhile, Altria Chairman and CEO Howard Willard said, "While we believed the creation of a new merged company had the potential to create incremental revenue and cost synergies, we could not reach agreement."

Altria also raised the lower end of its adjusted diluted EPS outlook for fiscal 2019 to a range of $4.19 to $4.27 from its previous guidance of $4.15 to $4.27, according to a same-day release.

Separately, Juul Labs Inc. announced that its CEO Kevin Burns will step down, effective immediately. Burns will be succeeded by K.C. Crosthwaite, who will step down from his roles in Altria as senior vice president and chief strategy and growth officer.

Altria owns a 35% stake in the California-based company.

"This decision by Juul recognizes that this is a critical time for the company," Willard said, adding that Crosthwaite's experience in the industry will help the e-cigarette manufacturer "achieve its mission, while also urgently confronting and reversing underage use of vapor products."

The change comes after The Wall Street Journal reported that Juul Labs was preparing for staff restructuring. The maker of Juul device kits, pods and accessories is facing multiple investigations into its practices as health concerns over vaping devices escalate.

The e-cigarette company also said it will suspend all forms of product advertising in the U.S. and halt from lobbying the administration on its draft guidance, effective immediately. Instead, the company committed to fully supporting and complying with the government's final policy once it takes effect.

"We must strive to work with regulators, policymakers and other stakeholders, and earn the trust of the societies in which we operate," Crosthwaite said in a statement. "That includes inviting an open dialogue, listening to others and being responsive to their concerns."

Shares of Altria rose 2.5% in premarket trading but opened down 0.3%. Philip Morris shares were up 5% in early trading.