Altria, Philip Morris End Merger Talks

Altria Group, Inc. MO and Philip Morris International Inc. PM have ended merger discussions with Altria providing a statement on Juul leadership change and tightening 2019 full-year earnings guidance.

"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," said Howard Willard, Altria's CEO. "We look forward to continuing our commercialization of IQOS in the U.S. under our existing arrangement."

Tobacco stocks have slumped after reports emerged the Food and Drug Administration said it's investigating 127 reports of seizures after vaping. Altria owns Juul Labs, which has come under fire for marketing unauthorized modified risk tobacco products — including to youth.

The FDA has received around 92 new reports of people, especially kids and young adults, experiencing seizures after using e-cigarettes since it first announced its probe into the issue in April. It is unclear whether the e-cigarettes caused the seizures.

Earlier Wednesday, Juul announced the appointment of K.C. Crosthwaite as its CEO. He is stepping down from his position as senior vice president, chief strategy and growth officer of AltriaL.

Commenting on this recruit, Willard said, "K.C. is a proven industry leader who understands the importance of responsible business practices. This decision by JUUL recognizes that this is a critical time for the company. I believe K.C.'s experience, discipline and dedication to making harm reduction an industry-wide reality will help JUUL achieve its mission, while also urgently confronting and reversing underage use of vapor products."

In Wednesday’s pre-market session, Phillip Morris shares were trading up 6.2% at $76. The stock has a 52-week high of $92.74 and a 52-week low of $64.67.

Altria shares were trading up 2% at $41.56. The stock has a 52-week high of $66.04 and a 52-week low of $42.40.

Related Links:

FDA Warns Juul On Marketing To Youth

Tobacco Stocks React As FDA Investigates Reports Of Seizures After Vaping