Philip Morris doesn’t go into detail about why it is ending the merger talks with Altria. However, it’s possible that a few factors were getting in the way of the deal. The first is push back from investors. Both PM stock and MO stock have been falling in the month following the announcement of merger plans.
Another factor that may be scaring the two companies is the ongoing controversies around e-cigarettes. A few states in the U.S. have already, or are planning to, ban flavored e-cigarettes. President Donald Trump is also working toward a federal ban as well. It’s worth mentioning that India is also banning the products.
So where exactly are Phillip Morris and Altria going from here? The end of merger announcement also details their future plans together. This includes working to have IQOS sold in the U.S. This is a new heated tobacco product that isn’t part of the e-vapor category.
Philip Morris and Altria are likely hoping to avoid controversy with this new product. They claim that after four years of use, IQOS hasn’t been appealing to youth or nonsmokers. If this holds true after its launch, it may help keep regulators from cracking down on the product.
PM stock was up 6.3% and MO stock was down 1.5% as of Wednesday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.