Next year will mark the 10th anniversary of the separation of Philip Morris International (NYSE:PM) from Altria (NYSE:MO). The demerger was designed to insulate Philip Morris from Altria's legacy litigation risks, but in many ways, independent Philip Morris has faced far rougher seas than its former parent. While Altria has derived the steady benefits from the relatively loosely regulated US cigarette market, Philip Morris has in recent years faced currency volatility and volume disruption in many of its markets.
In a rather interesting reversal of sentiment, the US cigarette market is nowadays again perceived as very attractive, whereas during much of the 1990s and 2000s, a presence in the US market was perceived to come with a high risk of costly and long-lasting litigation. Recent acquisitions of US cigarette assets by international companies, such as the Reynolds (NYSE:RAI) buy-out by British American Tobacco (NYSEMKT:BTI), seem to confirm the idea that the US market is viewed more positively now. With the benefit of hindsight, the deconsolidation of old Altria increasingly looks like it may have been a strategic mistake.
