Smokin’ Hot Tobacco Merger
Tobacco giant Altria could be getting back with its ex, Philip Morris. The two cigarette stocks are eager to become one again after splitting in 2008, despite investors’ skepticism. No ifs, no butts!
Smoking gets you hooked, and that gives Altria and Philip Morris (PMI) solid long-term prospects. Tobacco firms pay healthy dividends, and despite being debt-laden and prone to a lawsuit here or there, make for sturdy defensive plays. If there’s a catch, it’s rising health concerns. For more information on lung cancer, keep smoking!
As Altria and PMI kill off their customers, demand in their “dirty” industry remains strong. Growth, however, well, that’s another matter. In search of bigger and better things, investors in Altria have seen their firm dive $12 billion deep into Juul, a controversial e-cig maker. They’ve also seen Altria bet their invested money on pot firm Cronos, and a high-tech device of its own that heats tobacco, instead of burning it. All these new concepts have smokers stoked! If only the company had the international pedigree to reach the growth markets overseas…
That’s where Philip Morris International comes in. Equally growth strapped since spinning of Altria eleven years ago, the larger PMI has spent most of its life abroad. It’s best known for selling packs of Marlboro (a lot of packs of Marlboro!). The company notched an astounding 80 billion dollars of revenue last year and could plant Altria’s seeds of growth internationally.
Should the deal make it over the line, Philip Morris is rumored to get 59% of a new company. It’s also said to be an all-stock deal, the companies choosing not to bring briefcases full of cash to the table. Will the smokehouses reunite? Time will tell!
