Tobacco M&A: Where Is Phillip Morris (MO)

The company’s slogan used to be "Call for Phillip Morris". Well, tobacco mergers and acquisitions are heating up and the world’s largest company is silent.

Imperial Tobacco (ITY) has already bought US cigarette company Commonwealth Brands, and is now making a  $15 billion plus run at Spanish smokes company Altadis. Earlier this year, Japan Tobacco made a bid for cigarette company Gallaher Group (GLH).

Now that Phillip Morris parent Altria (MO) is spinning off its Kraft (KFT) food business, it would seem that it would want to enhance its presence in the global tobacco industry. It is already the largest tobacco company in the world, and its international business is much larger than its revenue in the US.

And Altria has the market cap to buy virtually any rival. British Tobacco’s market cap is $29 billion. Altria’s is $178 billion.

Wall St. should not be surprised if Altria does become aggressive in the tobacco M&A market. It may allow some consolidation among smaller companies. But, if investors open the morning paper some day and see that MO has made a bid for Imperial Tobacco, no one should be surprised.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.