Philip Morris and Altria end merger talks and Juul boss steps down as vaping in spotlight over deaths
Tobacco giants Philip Morris International and Altria have ended their merger talks after a series of deaths in the US raised questions about the future of vaping, which industry insiders had hailed as safer than cigarettes.
“After much deliberation, the companies have agreed to focus on launching Iqos in the US as part of their mutual interest to achieve a smoke-free future,” said Philip Morris chief executive Andre Calantzopoulos. Iqos is a heated tobacco product.
The talks started in August and would have created a $210bn (£170bn) behemoth. Altria sells Marlboro cigarettes in the US, while Philip Morris caters to international markets.
The companies split in 2008 as regulators put pressure on them.
However recently they have been eyeing a tie-up as both put new products, such as e-cigarettes, at the front of their strategy.
“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 Altria chief executive Howard Willard.
Meanwhile Juul Labs, a vaping company which Altria owns a major stake in, said that its chief executive was stepping down. Kevin Burns was a co-founder of the company will be replaced by K.C. Crosthwaite, the chief growth officer at Altria.
Philip Morris was up 7.3 per cent in pre-market trading while Altria rose 4.1 per cent.
Read more: Juul raises $325m to fund global expansion of e-cigarette range
Juul also said that it would suspend all broadcast, print and digital advertising in the US. It has also promised to not lobby the government
It comes after reports of several deaths linked to vaping in the country.
Two weeks ago US President Donald Trump said that vaping had become a “problem” while speaking to reporters at the White House.
Around 450 cases of vaping-linked lung illnesses have been reported in the US.
“We can’t allow people to get sick, and we can’t have our youth get so affected,” Trump said.
Read more: Vaping ‘a problem’, says Trump as officials move to ban flavoured e-cigarettes
Officials have said that fruit flavours are attracting children to the products.
Willard, the Altria boss, said this is a “critical time” for Juul. He said Crosthwaite , who “understands the importance of responsible business practices”, shows dedication to “urgently confronting and reversing underage use of vapour products”.