Tobacco giants Altria Group Inc. and Philip Morris International Inc. announced Aug. 27 they are in talks regarding a potential all-stock merger of equals.
Altria shares jumped 8.3% in morning trading to $51.06 following the announcement, while Philip Morris shares dropped 6.3% to $72.76.
The announcement confirms what some analysts and observers have long considered as a potential move for the companies. Altria spun off Philip Morris in 2008.
Altria makes and sells cigarettes in the U.S. and has invested in the e-cigarette company Juul Labs Inc. and the Canadian cannabis producer Cronos Group Inc. Philip Morris sells tobacco products outside the U.S., including cigarettes and smokeless products.
The companies issued similar statements Aug. 27 that said there is no assurance that any agreement or transaction will emerge from the discussions. They said there was no guarantee that even if some kind of agreement is reached, a transaction would be completed.
Any potential deal would be subject to approval from the companies' boards and shareholders and regulators, the companies said.
A combined company would be worth more than $200 billion, based on current valuations. Altria's market capitalization on Aug. 27 was $95.15 billion, while Philip Morris was worth $112.91 billion, according to data from S&P Global Market Intelligence.
