Once again speculation is rife that Altria (MO) and Philip Morris (PM) are preparing to remerge into one company after previously demerging in 2008. If this eventuates it would recreate a tobacco industry titan that sports a market capitalization in excess of $200b. This isn't the first time the idea has taken hold and given recent industry events that have caused a great deal of uncertainty, I will discuss which group of shareholders appears to have more to gain from a conceptual standpoint.

The primary benefit Altria would receive is from dramatically reducing their exposure to possible new future FDA regulations that are designed to significantly reduce smoking rates. These have already been discussed frequently and include lower nicotine levels, banning menthol cigarettes and adding graphic warning labels to packaging. If these new regulations have the desired impact it will spell bad news for Altria, whose earnings will likely continue relying heavily on their core tobacco business segment in the medium-term despite their non-tobacco investments.

Secondarily, Altria through their subsidiaries, Juul (JUUL) and Cronos (OTC:CRON), could benefit from Philip Morris' expertise in managing a global supply network. It's no secret that both of these companies aspire to continue growing internationally and managing the differing regulatory landscapes can become difficult.

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