Wed. Nov 20th, 2019

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

1 min read

S&P Global Ratings said there is insufficient information available regarding a potential all-stock merger between of equals between Philip Morris International Inc.

PM, -7.03%

and Altria Group Inc.

MO, -3.27%

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

DJIA, -0.29%

has advanced 10.7%.

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