Phillip Morris and Altria's tobacco mega-merger goes up in smoke as Juul struggles with vaping backlash
- Phillip Morris announced in a press release on Wednesday that it has ended merger talks with Altria.
- The proposed merger got caught up in the controversy surrounding vaping-industry leader Juul, whose CEO stepped down on Wednesday.
- Altria bought a $12.8 billion stake in Juul in December 2018.
- Shares of Phillip Morris rose as much 7% on the news, while Altria's stock gained 3%.
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CEO stepped down on Wednesday.Advertisement
Shares of Phillip Morris rose as much 7% in early trading on the news, while Altria's stock gained 3%.
Philip Morris and Altria said in a pair of statements that they will proceed with a previously-agreed-upon partnership for IQOS, a tobacco vaporizer. As of right now, it's the only product of its kind with premarket authorization from the Food and Drug Administration."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," Howard Willard, Altria's chairman and CEO, said in a press release. "We look forward to continuing our commercialization of IQOS in the U.S. under our existing arrangement."
Altria's investment in Juul has been a major drag on its stock in 2019. The company has seen roughly $30 billion in market value erased since April, when the FDA launched a new investigation into vaping.Phillip Morris said it began discussing a potential all-stock merger with Altria in late August, reuniting the two tobacco operations after they split in 2008. Shares of Phillip Morris rose 7% on the news, while Altria's stock gained close to 3%. Advertisement
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