Altria and Philip Morris Want to Merge. Blame Regulators.

奥驰亚和菲利普莫里斯想合并。指责监管者.

2019-09-13 02:50:00 Barrons.com

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Despite Altria Group and Philip Morris International ’s long association, recent talk that they might merge has left many investors scratching their heads. The latest moves toward government regulation may help explain why the cigarette companies want to recombine. The devil will be in the details. The pair used to be one company, but a little over a decade ago, Altria (ticker: MO) spun off Philip Morris (PM), charging it with overseeing international markets. Altria handled the U.S. (That is why both companies have claim to well known brands like Marlboro, which Altria sells in the U.S. and Philip Morris markets overseas. It is also the reason Altria will handle the American rollout of Philip Morris’s heat-not-burn iQOS device.) The idea of recombining the two, especially in an age of big tobacco consolidation, has been floated in the past. It became more than theoretical last month: Late August brought rumors of talks between the two, which the companies later confirmed. While plenty of analysts were quick to praise the deal, others have been more cautious. Investors aren’t convinced either: Both Altria and Philip Morris have seen their stocks suffer since they announced negotiations. It isn’t hard to see why the naysayers are concerned. Philip Morris stock has taken the bigger hit: A recombination with Altria would expose it to U.S. regulation, which it has thus far been able to avoid, as well as worries about falling sales of traditional cigarettes in the U.S. Moreover, while Philip Morris’s iQOS has won some praise, investors have been less eager to reward Altria for its attempts to position itself for a cigarette-free future. Its initiatives include putting money to work in the nicotine pouch product on!, cannabis company Cronos Group (CRON), and most famously, Juul Labs, the vaping startup. The latter is the real sticking point for many. A number of deaths and illnesses in recent weeks has put the spotlight squarely on vaping. As the biggest player in the U.S., Juul has come under sharper scrutiny than others. Additionally, Altria has a noncompete agreement with Juul, which may be leading to concern that the combined company could abandon iQOS before it has a chance to get off the ground in the U.S. Another possibility, also unappealing, is that the merged business could give up any active say over how Juul operates. Advocates of the merger say that a recombined firm would enjoy larger scale and be better able to compete with peers. And while the strong greenback makes it costly for Philip Morris to repatriate profits, the combined business could use dollars generated by the U.S. operations to pay for share buybacks and dividends, the argument goes. The deal’s backers may have gotten another arrow in their quiver this week, when the Food and Drug Administration announced a potential ban on all flavored vaping products. While regulation is always a threat to big tobacco, and the idea of cracking down on flavors specifically has long been in the mix, a swifter or more draconian government move—in reaction to mounting public health worries—could make increased size and scale more appealing to Altria and Philip Morris. All that may do little to persuade Philip Morris investors. The stock had a strong run in late 2018 and for much of this of this year. Philip Morris is still up nearly 12% in 2019, while Altria is off more than 10%, but the former’s rally, which had lifted the shares ahead of the S&P 500, has been cut short by the talks. Some of the concern may dissipate if more concrete rules on vaping emerge, even if they are stricter. Yet Philip Morris investors may be reluctant to expose themselves to FDA regulation once again, especially because standards on vaping are less stringent elsewhere. That isn’t to say that Philip Morris holds all the cards. Altria shareholders may also feel that a merger of equals—the plan under discussion—would give them short shrift. While Philip Morris has soared lately, it is a relatively new development. In the past decade, its stock price has risen just 53%, compared with a 149% gain for Altria. Both lag behind the S&P 500’s 185% rise over the same period.   Foreign exchange and costs associated with iQOS have weighed on Philip Morris profits in recent years. The bulls argue that is changing, but Altria shareholders may argue that they deserve a premium. Whether or not a deal gets done remains to be seen, but there are other reasons for investors to root for this outcome. Lawsuits over how tobacco companies marketed their products—and what they knew about the health risks of smoking—were plaguing the industry at the time of the split; it made sense to divide the U.S. and overseas businesses to simplify the regulatory risks. That litigation is much less of an issue today as the industry shifts toward vaping and other alternatives. (Vaping could spawn its own litigation, and further sour Philip Morris shareholders on the deal, but any lawsuits are unlikely to be as big as those over cigarettes.) A brave new world for tobacco may require a new old company to navigate it.
尽管如此 奥驰亚集团 及 Philip Morris International 这种长期的关联,最近关于它们可能合并的说法,让许多投资者头晕目眩。政府监管的最新举措可能有助于解释为什么烟草公司希望重组。 魔鬼就在细节上. 两人过去是一家公司,但在十多年前, 奥驰亚 (股票代码: MO )从菲利普莫里斯公司( PhilipMorris )分拆出来,负责监管国际市场。 奥驰亚 处理美国事务。 (这就是为什么这两家公司都声称拥有知名品牌,比如万宝路( Marlboro ),奥驰亚在美国和菲利普莫里斯( Philip Morris )的海外市场都有销售。这也是奥驰亚将在美国推出菲利普莫里斯( Philip Morris )热销的 iQOS 设备的原因。) 这两家公司的重组计划,尤其是在烟草大合并的时代,在过去已经提出。上个月,它变得不仅仅是理论上的:8月下旬带来了两家公司之间谈判的谣言,两家公司后来证实了这一点。 尽管许多分析师很快赞扬了这笔交易,但其他分析师则更为谨慎。投资者也不相信:奥驰亚和菲利普莫里斯自从宣布谈判以来,他们的股票都受到了影响。 不难理解为什么反对者会担心。菲利普莫里斯公司的股票受到了更大的冲击:与奥驰亚的重组将使其受到美国监管的影响,到目前为止,该公司一直能够避免这一点,并担心美国传统卷烟销量下降。 此外,尽管菲利普莫里斯( Philip Morris )的 iQOS 赢得了一些赞誉,但投资者对奥驰亚( Altria )为实现无烟未来所做的努力不那么热衷。它的举措包括投入资金在尼古丁袋产品上工作!大麻公司 Cronos Group ( CRON )和最著名的创业公司 Juul Labs 。 后者是许多人真正的症结所在。最近几周的一些死亡和疾病使人们的注意力集中在了撒谎上。作为美国最大的球员,朱鲁受到了比其他人更严格的审查。 此外,奥驰亚与 Juul 达成了一项非竞争协议,这可能导致人们担心合并后的公司可能会在有机会在美国落地之前放弃 iQOS 。另一种可能性,也不会让人反感,那就是合并后的公司可能放弃对 Juul 运营方式的任何积极发言权。 支持合并的人说,重组后的公司将享有更大的规模和更好的能力与同行竞争。而且,尽管强势美元让菲利普莫里斯将利润汇回国内的成本高昂,但合并后的业务可能会使用美国业务产生的美元来支付股票回购和股息。 本周,当美国食品药品监督管理局(Food and Drug Administration)( FoodandDrugAdministration )宣布可能禁止所有口味的 vaping 产品时,这笔交易的支持者们可能又获得了另一支箭。尽管监管总是对烟草巨头构成威胁,尤其是对口味进行整顿的想法早就存在了,但为了应对日益加剧的公众健康担忧,政府采取更快或更严厉的举措,可能会让规模和规模的扩大对奥驰亚和菲利普莫里斯更具吸引力。 所有这些都不能说服菲利普莫里斯的投资者。该股在2018年末和今年大部分时间都表现强劲。菲利普莫里斯公司的股价在2019年仍上涨了近12%,奥驰亚公司的股价下跌了10%以上,但前一次的上涨使该公司股价提前上涨。 标准普尔500指数. 由于会谈的原因,谈判被缩短了。 如果出现更具体的关于虚荣的规则,即使是更严格的规则,有些担心也会消散。然而,菲利普莫里斯的投资者可能不愿意再次暴露在 FDA 的监管之下,特别是因为在其他地方,有关 vaping 的标准不那么严格。 这并不是说菲利普莫里斯持有所有的卡片。奥驰亚的股东们也可能觉得,平等合并(正在讨论中的计划)会让他们感到短暂的缩水。 虽然菲利普莫里斯公司最近大幅增长,但这是一个相对较新的发展。过去十年,其股价仅上涨了53%,而奥驰亚的涨幅为149%。两者都落后于标普500指数同期185%的涨幅。 与 iQOS 相关的外汇和成本近年来拖累了菲利普莫里斯的利润。看涨人士认为这种情况正在改变,但奥驰亚的股东可能会认为,他们应该得到溢价。 交易是否完成仍有待观察,但投资者也有其他理由支持这一结果。关于烟草公司如何销售其产品的诉讼——以及他们对吸烟对健康风险的了解——在分裂时期困扰着烟草行业;为了简化监管风险,将美国和海外企业分开是有道理的。 这场诉讼在今天不是一个问题,因为该行业转向了 vaping 和其他选择。( Vaping 可能会引发自己的诉讼,并进一步让菲利普莫里斯的股东对这笔交易不满,但任何诉讼都不太可能像香烟诉讼那样严重。) 一个勇敢的烟草新世界可能需要一个新的老公司来驾驭它。

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