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PM / MO Merger?!
#1
At risk of squashing spontaneity, thought I'd start a specific thread on this.

What do you all make of the various comments warning that PM and MO will use this as an opportunity to lower the overall / combined / net dividend?
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#2
I personally haven't followed either company in a while. I simply see smoking as an outdated business, I remember letting go of PM years ago. It was above $80 back then.

Today was definitely a great opportunity to get out of MO at the open, I know divmenow took it, (and then bought himself back in! Big Grin) hope someone else did too.

Regarding the dividend, I think it would quite a silly thing for them to merge only to cut down on the dividend payment. I mean, they could just lower their respective dividends if they need to do it. Investors know how to do simple math. :p I think it's more about them trying to figure out ways to keep the business growing somehow, which I understand to have been the reason for their separation years ago. Big Grin
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#3
I would be very surprised if a combined entity paid out less in dividends to shareholders than the predecessor entities, on a combined basis. Tobacco stocks are the quintessential dividend stocks.

I think it is a good combo. MO gets free access to IQOS, PM gets a piece of JUUL and can market it internationally, PM also gets diversification through BUD, and there's Cannabis on the horizon.

The U.S. litigation fears that plagued the pre-split entity have passed, as far as cigarettes are concerned. Whether vaping products become a litigation magnet is another matter.
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#4
Do you think regulators would allow MO and PM to merge?
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#5
(08-28-2019, 08:44 AM)DividendGarden Wrote: Do you think regulators would allow MO and PM to merge?

Why wouldn't they? What are the antitrust concerns? MO operates entirely within the U.S. market, and PM entirely outside the U.S. market. As far as antitrust law is concerned, this proposed merger raises far fewer concerns than BTI/RAI did.
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#6
Hi all,

About MO. I have around 3K invested in MO. Is it better to sell and buy more of PM, due to the merger.

Thanks.
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#7
(08-28-2019, 01:55 PM)stewardinlife Wrote: Hi all,

About MO. I have around 3K invested in MO. Is it better to sell and buy more of PM, due to the merger.

Thanks.

Probably way too soon to make that call. No deal has yet been agreed, but I'm sure the merger arbitrage crowd over on Seeking Alpha will have plenty of articles about this proposed tie-up. 

I hold both, and intend to just continue to hold both until they become the same thing, assuming the deal goes through, and is not objectively terrible for either holding. 

I am not much of a trader, though, so probably shouldn't comment on trading strategies. Once I own something I get greedy and want to keep it.
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#8
(08-28-2019, 04:03 PM)Otter Wrote:
(08-28-2019, 01:55 PM)stewardinlife Wrote: Hi all,

About MO. I have around 3K invested in MO. Is it better to sell and buy more of PM, due to the merger.

Thanks.

Probably way too soon to make that call. No deal has yet been agreed, but I'm sure the merger arbitrage crowd over on Seeking Alpha will have plenty of articles about this proposed tie-up. 

I hold both, and intend to just continue to hold both until they become the same thing, assuming the deal goes through, and is not objectively terrible for either holding. 

I am not much of a trader, though, so probably shouldn't comment on trading strategies. Once I own something I get greedy and want to keep it.

Thanks for your helpful input.
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#9
Interesting take on potential PM / MO monopoly on e-cigs...
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#10
Ban baby ban!!
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