For Philip Morris Internationals and Altria, the decision of break up might have been a hard pill to swallow. It has been ten years since they initially split up. In a surprise move, both the tobacco giants made an announcement of pondering over a merger this week. This potential merger has the ability of ending years of debate of the possible reunion of the companies.
Altria manufactures Marlboro and back in 2008, it spun off the PMI to assist the growth of international business while shielding it from litigations and regulations of the U.S. In case the companies do reunite, the new venture would be worth a whopping sum of $200 billion. This will dwarf the existing market value of its subsequent rival called the British American Tobacco. The gap in worth would be nearly $120 billion. However, there has been a sea change in this past decade ever since the split. As a result, Big Tobacco no longer has the option of pinning its future hopes on the very cigarettes that its reputation was built on.
The sole problem is that Altria is targeting cannabis and vaping as the two major sectors for growth. These are the exact sectors that are under regulatory scanners. In particular, electronic cigarettes are already facing the heat from investigations, accusations and litigation of intentionally getting underage kids hooked on nicotine pods that are addictive in nature.
Even today, the sale of cigarettes is an extremely profitable business in spite of its shrinking size. Smoking rates all over the globe are declining owing to health officials all over sounding alarms regarding the long-term consequences on health it might have. As retaliatory measure, tobacco companies have resorted to inventing other ways for delivering nicotine with less carcinogenic content, such as e-cigarettes, nicotine pouches that are oral derived and heated products containing tobacco products that refrain from releasing tobacco toxins contributing to cancer.