Altria is the new name, adopted in 2003, for what was previously the diversified conglomerate Philip Morris Companies. Its biggest business by far is Philip Morris USA, the home of Marlboro cigarettes and other brands. Although it retains a small collection of operating interests in lease finance and wine, most of Altria's other big subsidiaries were spun off in the 2000s. Its premium wine division Ste Michelle Estates - brands include Chateau Ste Michelle, Columbia Crest and 14 Hands - is also considered a prime contender for sale. Philip Morris Companies was not only the world's largest tobacco producer, but also the umbrella for food and beverage giant Kraft and for America's second-largest brewer, Miller. The reduction in tobacco-related litigation following a historic industrywide legal settlement at the end of the 1990s prompted the group to begin separating out its various component businesses. The brewery business was spun off in 2002 into what became SABMiller and was itself later acquired by AB InBev, in which Altria now has a 10% stake. Kraft was established as an independent entity in 2007, and was later acquired by Heinz to become The Kraft Heinz Company. In 2008, all of the group's international tobacco operations were also spun off as Philip Morris International. Despite declining tobacco sales, Altria's revenues have remained bouyant, steadily increasing each year, net of excise tax. The group has also broadened its portfolio, acquiring large minority stake in 2018 in both Canadian cannabis grower Cronos and US-based e-cigarette business Juul. Net revenues (after excise) for 2018 were $25.4bn, with net earnings of $7.0bn. All but around $800m of revenue was derived from tobacco products. Howard Willard is CEO.
Capsule checked 29th August 2019
Who are the competitors of Altria? See Tobacco Sector index for other companies
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Adbrands Daily Update 29th Aug 2019: Philip Morris International confirmed it is in advanced talks with former parent Altria to reunite the two separate Philip Morris tobacco businesses. These were split in 2008 to insulate the company's international operations against potential litigation in the US. A decade later, though, the risks of litigation have reduced and both companies are separately struggling to deal with the continuing decline in traditional tobacco consumption, while also aggressively marketing their own smoke-free "reduced risk" alternatives. PMI markets the iQOS heated tobacco system in international markets. Altria/Philip Morris USA owns the MarkTen vaping brand, acquired a large holding in high-profile e-cig brand Juul last year, and also recently gained FDA approval to begin marketing PMI's IQOS in the US under license. Any re-merger is likely to be an all-stock affair, with shareholders in PMI - the larger of the two by market value - gaining around 59% of the combined business. In all other respects, though, this would be presented as a merger of equals. Even so, neither company's investors welcomed the announcement of a possible merger, prompting a sharp sell-off of both sets of shares.
Adbrands Daily Update 20th Dec 2018: Hot on the heels of its stake in cannabis producer Cronos, Altria made an even bigger - but slightly more orthodox - investment in vaping company Juul, which has successfully cornered the US market, especially for younger consumers. In 2017, it had a leading 29% share of the US e-cig market. Altria has acquired a 35% stake in Juul for $12.8bn in cash, its biggest ever purchase. As part of the deal, Altria will market Juul alongside its traditional combustible cigarettes. Altria is prohibited from increasing its stake above 35%, and is barred from selling any shares until at least 2025.
Adbrands Daily Update 10th Dec 2018: Marlboro Marijuana anyone? The rolling legalisation of cannabis across North America is prompting a high-value feeding frenzy for some big companies. Constellation Brands is already leading the pack in beverages, but US tobacco giant Philip Morris is the first to jump head first into smokeables. PM USA's parent Altria has acquired a 45% stake in Canadian cannabis producer Cronos Group for a lavish $1.8bn, with an option to acquire majority control before 2022. The two partners aim to establish marijuana as a standard consumer product on a par with alcohol. Altria is also in talks to invest in leading US e-cig marketer Juul.
Adbrands Weekly Update 17th Jul 2014: US tobacco companies Reynolds American and Lorillard agreed terms for a merger to create a stronger rival to local leader Altria, whose Marlboro brand still dominates the sector with more than 40% market share. Other brands contribute to Altria's total share in 2013 of just under 46%. Currently, #2 player Reynolds is some way behind at 24.7%, from products such as Pall Mall and Camel, but its share has been in slow decline for several years. Third-ranked Lorillard, on the other hand, has been growing because of the popularity of its menthol brand Newport, now the second best-selling cigarette after Marlboro. In 2013, its market share rose to 13.6%. Under the deal unveiled this week, Reynolds would acquire Lorillard for around $27.4bn in cash and stock. In order to ease regulatory concerns over the reduction of competition in what is already a highly controversial sector, Reynolds and Lorillard are also offering to divest several brands. Much smaller Imperial Tobacco, maker of discount brand USA Gold, has been lined up to acquire Reynolds' Winston, Salem and Kool brands, as well as Lorillard's Maverick and top-selling Blu e-cigarette brand, for around $7.1bn. That would reduce Reynolds/Lorillard's combined share to a little over 35% and lift Imperial to over 9%. At the same time, British American Tobacco, the largest shareholder in Reynolds, is investing $4.7bn in order to maintain its 42% holding in the merged group. The extraordinarily complex deal will require the approval of three sets of shareholders and is also likely to entail a long regulatory investigation.
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