Altria Group Inc (NYSE:MO) and Philip Morris, both major tobacco manufacturers, maybe reuniting soon. They made the announcement on Tuesday and talks regarding the merger are currently underway. If matters play out according to plan, the two business giants will combine two of the most popular brands globally. These are traditional and electronic cigarettes.
The deal
The proposed deal has been termed a progressive one by several market observers. They see it as a merger of equals, which will result in the introduction of leading brands in the market. However, Philip Morris International has sent out a word of caution to all the parties following the matter closely. It said that discussions were just discussion and not a guarantee that they will reach a consensus.
Centers for Disease Control and Prevention released a statement showing the market statistics. In 2017, there was a decline in the number of products sold in the United States. The figure is said to have dropped by 3.5 percent in the previous year.
Reports also indicate that in 2018, the e-cigarette market stood at $11 billion. Experts have been making projections that by 2024 the figure will have risen to hit the $18 billion mark. These were, of course, officials from a market research firm called Mordor Intelligence.
The turn of events
It was in the previous year that Altria
agreed to a plan to pay about $13 billion in a new deal. It was to take up
about 35 percent of Juul Labs. One encouraging aspect of the proposed merger was
the fact that it would probably boost Altria’s investment significantly.
Juul has been making efforts to expand its operations oversees. However, it has
been lacking in terms of having in place a dependable global distribution
network. Philip Morris prides itself in having an outstanding global
distribution network. It has been growing consistently since its span of from Altria
in 2008.
Experts say the latest move will see Philip Morris reap numerous benefits from Juul, as opposed to competing against it. Morris’s marquee product is less harmful because it contains quite little in the form of harmful chemicals.
