Imperial Tobacco (ITY) is buying rival Altadis for almost $18 billion. The combination would create the largest tobacco company in Europe and largest cigar company in the world. The new company would be No.1 in market share in U.K., France, Spain, and Germany.
The news will not exactly be welcome at the Philip Morris unit of Altria (MO). In the last quarter, about three-quarters of MO’s sales came from overseas with revenue hitting $13.3 billion up 13% from the same quarter the year before. Operating income hit almost $2.2 billion, according to the company 10-Q.
Most of Altria’s overseas strength is in Asia, Africa, and the Middle East. But, France, Italy, Greece, Sweden, and the UK are also critical markets. During the last quarter, MO has a 3.4% increase in cigarette volume in the European Union, but it lost market share in large countries like Germany and France.
With a larger rival, MO is going to have to dig on for a long fight in Europe.
Douglas A. McIntyre can be reached at [email protected].
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