There has been quite a bit of chatter surrounding a potential merger between Altria Group Inc (NYSE: MO) and Philip Morris International Inc. (NYSE: PM). Today, MO is making a run for the top after confirming those talks.
In a press release issued this morning, Altria Group said that it is indeed in discussions with Philip Morris. These discussion surrounds a potential all-stock merger.
Of course, in the release, MO said that there can be no assurance that any agreement will be reached as a result of these discussions, nor any assurance that should an agreement take place, the transaction will close.
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MO Stock Holders Have A Lot To Gain Here
At the end of the day, Altria Group and Philip Morris are two of the largest tobacco producers in the world. A merger between the two would be a match made in heaven as it would bring some of the most popular brands together.
This is also an interesting play from a cannabis sense. Both of these companies have expressed a serious interest in the emerging industry. In fact, Altria group has already invested billions in the space.
Of course, should recreational cannabis become legal in the United States, it only makes sense that two of the largest players in the tobacco industry would likely become serious competitors in the cannabis space.
Should a merger take place, these massive tobacco companies will become one conglommerate. That means that shareholders of MO and PM will both gain from being owners of a goliath player that has a competitive edge in both tobacco and cannabis.
Another Big Opportunity From This News
While the bullish opinions all surround MO stock at the moment, the truth of the matter is that if a deal were to take place, it would be incredibly positive news for Canopy Growth Corporation (NYSE: CGC).
After all, Altria Group is the company’s largest investor after the $1.8 billion invested in December of 2018. While the funds invested were appealing, what was most interesting to me about this deal had to do with the strength and experience Altria Group offered as a partner.
The truth of the matter is that there are expectations that the United States will legalize cannabis for adult recreational use relatively soon. Should this take place, a huge opportunity would be born for Canadian cannabis producers that already have a footprint in the United States. MO offers CGC this footprint.
Should a merger take place, the strength in the United States footprint offered to CGC by MO would expand significantly. All in all, this is a correlated opportunity that few seem to be paying attention to yet.
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