Philip Morris Ends IQOS Commercial Partnership With Altria

Philip Morris International Inc PM has agreed with Altria Group Inc MO to end the companies' commercial relationship covering IQOS in the U.S. as of April 30, 2024.
IQOS is a smoke-free product with heat-not-burn technology.
Thereafter, Philip Morris will have the full rights to commercialize IQOS in the U.S.
As part of the agreement, PMI will pay a total cash consideration of $2.7 billion, of which $1.0 billion was paid at the inception of the agreement using available cash.
The remaining $1.7 billion, plus interest, will be paid by July 2023.
The original agreement between the two companies was announced in 2013 and accounted for Altria's ownership of certain U.S. intellectual property rights related to the IQOS technology developed before PMI's 2008 spin-off.
After IQOS's authorization for sale in the U.S. in 2019, the agreement covered an initial 5-year commercialization term for the product through April 2024, with a renewal option for a second 5-year term through April 2029.
Philip Morris plans full-scale launches in key cities and regions with rapid progression to a national presence. It believes IQOS heat-not-burn products could account for around 10% of the total U.S. cigarette and heated tobacco unit volume by 2030.
"The agreement also avoids what could have been an uncertain and protracted legal process that would have severely hindered the fast deployment of IQOS in the U.S.," said CEO Jacek Olczak.
Price Action: PM shares are trading higher by 1.55% at $87.81 in premarket on the last check Thursday.

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