Marlboro makers in talks to reunite

Altria spun off global operations in ’08

NEW YORK — Tobacco company Altria confirmed Tuesday that it is in talks to merge with Philip Morris International, more than a decade after the companies split.

Altria has exclusively sold Marlboro cigarettes and other tobacco brands in the U.S., while Philip Morris has handled international Marlboro sales since they parted ways in 2008.

The combined company would have a market capitalization of over $200 billion, making it the largest publicly traded tobacco company worldwide.

Philip Morris said Tuesday that there is no guarantee of success in what would be an allstock deal. But analysts said the merger is likely to pass muster with antitrust regulators.

Both companies have been investing in alternatives to traditional cigarettes.

The companies are already partnering on the U.S. introduction of a heat-not-burn cigarette alternative, iQOS, made by Philip Morris. Separately, Altria is betting on electronic cigarettes, taking a roughly $13 billion stake in vaping giant Juul.

If successful, the merger would reunite the two arms of one of the tobacco industry’s oldest and biggest brands.

Altria, based in Richmond, Va., spun off its international operation in 2008 after waves of lawsuits and government scrutiny in the U.S. The breakup gave Philip Morris International more leeway to pursue sales growth in emerging markets. Anti-tobacco groups accused the company of maneuvering to unleash its marketing machine on nonsmoking women and children in poor, developing countries.

Since the split, Philip Morris has churned out new Marlborobranded products catering to tastes in Asia, Europe, Latin America and other regions.

Wells Fargo analyst Bonnie Herzog said the combination “would make a lot of sense,” allowing the companies to cooperate during the “global arms race” for nontraditional tobacco products.

The merger has the potential to supercharge Juul’s efforts to expand overseas, bolstered by the global marketing power of Philip Morris. The cash infusion from Altria could also help the new company ramp up marketing of the iQOS device in the U.S. and overseas.

Earlier this year Altria executives estimated annual U.S. cigarette volumes would decline between 4% and 6% through 2023, sending company shares down sharply.

Philip Morris, based in New York, has been rebranding itself with new products and the slogan “Designing a smoke-free future.”

The company sells its battery-powered iQOS device in 40 countries. The iQOS heats tobacco without burning it. It soon will be sold in the U.S. under a licensing agreement.

The devices differ from Juul’s high-nicotine flavored pods, which contain no tobacco. Altria owns a 35% stake in Juul, which has quickly grown to dominate the U.S. vaping market.