Altria Group Inc. (NYSE: MO) and Philip Morris International Inc. (NYSE: PM) saw their shares moving in opposite directions after the companies announced that their merger discussions have ended and that they will no longer be pursuing a merger.
These cigarette giants believed that the creation of a combined company had the potential to create incremental revenue and cost synergies, but management on both sides noted that they could not reach agreement.
In a separate announcement, Juul appointed K.C. Crosthwaite as its chief executive officer, to replace Kevin Burns, who had previously filled the role. As part of this, Crosthwaite is stepping down from his position as senior vice president and chief strategy and growth officer of Altria in order to join JUUL.
Note that Altria had taken a 35% stake ($13 billion) in Juul, valuing it up to $35 billion at the time and making it one of the most valuable private companies in the world.
Also, this appointment comes after growing health concerns over vaping have surfaced related to a few vaping-related deaths. Some states have even banned e-cigarettes, and the Trump administration has hinted that there may be a federal ban in the future.
In response, Altria’s board chair and CEO, Howard Willard, commented:
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.
Shares of Altria traded down about 1.5% to $40.12 on Wednesday. The 52-week range is $39.30 to $66.04, and the consensus price target is $54.71.
Phillip Morris traded up 6%, at $75.92 a share, in a 52-week range of $64.67 to $92.74.