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Altria receives $2.7 billion from Philip Morris for US sales rights to IQOS

Altria receives $2.7 billion from Philip Morris for US sales rights to IQOS
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Oct 19 (Reuters) – U.S. cigarette maker Altria Group Inc told industry peer Philip Morris International Inc (PMI) on Wednesday. (PM.N) In the US, IQOS agreed to pay him $2.7 billion for exclusive sales of heated tobacco products.

Altria said in a statement that it has already received $1.0 billion from PMI and will receive the rest by July 2023.

The company has been selling IQOS in the US through its PM USA unit in partnership with smokeless product developer PMI under a deal that will expire in 2024.

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“Upon meeting additional milestones, the US Prime Minister had the option of an additional five-year extension through April 2029. We believe that the US Prime Minister has met each of these milestones, but PMI disagreed with our position,” Altria said.

IQOS devices are different from traditional fuel cigarettes heat tobacco-filled sticks wrapped in paper produce an aerosol containing nicotine. They’re different from e-cigarettes like the Juul, which vaporize a nicotine-infused liquid.

CEO Jacek Olczak said that PMI is well-advanced in its plans to invest in IQOS and market it on a large scale in the United States.

“Given the well-established distribution and retail channels in the US, the route to market is clear, and if the bid for Swedish Match fails, we are ready to autonomously continue to develop IQOS and the rest of our smoke-free portfolio,” Olczak told Reuters in a statement.

Philip Morris plans to increase its bid for Swedish Match AB to $16 billion (SWMA.ST)The Wall Street Journal reported on Wednesday citing people familiar with the matter.

The new proposal is expected to be announced on Thursday, the newspaper said. Activist investor Elliott Management, which increased its stake in Swedish Match last month, plans to oppose the offer on current terms, along with some other investors. read more

PMI declined to comment on the WSJ report. Swedish Match did not respond to Reuters’ request for comment outside business hours.

PMI, which was spun off from Altria in 2008, will report quarterly earnings results on Thursday. Altria will report earnings in October. 27.

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Reporting by Anirudh Saligrama, Deborah Sophia and Abinaya Vijayaraghavan in Bangalore; Additional reporting by Juby Babu in Bengaluru; Edited by Stephen Coates and Christopher Cushing

Our standards: Thomson Reuters Trust Principles.

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