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Aug. 27, 2019, 1:56 p.m. EDT

S&P sees 'significant roadblocks' to completing a Philip Morris-Altria merger

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By Tomi Kilgore

S&P Global Ratings said there is insufficient information available regarding a potential all-stock merger between of equals between Philip Morris International Inc. /zigman2/quotes/201611010/composite PM +0.65% and Altria Group Inc. /zigman2/quotes/208895754/composite MO +1.39% to warrant any rating actions on either company. However, the credit rating agency said it believes there will be "significant roadblocks" to completing a merger, including agreeing on a valuation that both companies accept. "Specifically, we believe there could be significant disagreement over the valuation of the companies' next-generation products given the heightened regulatory scrutiny over some products (i.e. e-cigarettes) and the uncertain impact future regulatory actions could have, particularly in the U.S.," S&P Global Ratings said. If there is more evidence in the coming months that a deal is likely, S&P said it would then assess the potential rating of the combined company. Currently, S&P rates Philip Morris credit at A and Altria credit at BBB, which is just two notches above junk. Altria's stock dropped 3.2% in afternoon trading and Philip Morris shares shed 7.0%. Year to date, shares of Altria have lost 7.6% and Philip Morris have gained 8.4%, while the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.05% has advanced 10.7%.

/zigman2/quotes/201611010/composite
US : U.S.: NYSE
$ 74.21
+0.48 +0.65%
Volume: 5.18M
June 3, 2020 4:00p
P/E Ratio
15.12
Dividend Yield
6.31%
Market Cap
$115.56 billion
Rev. per Employee
$382,519
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/zigman2/quotes/208895754/composite
US : U.S.: NYSE
$ 40.21
+0.55 +1.39%
Volume: 8.42M
June 3, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
8.36%
Market Cap
$74.73 billion
Rev. per Employee
$2.36M
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,269.89
+527.24 +2.05%
Volume: 401.27M
June 3, 2020 5:18p
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