DealBook Briefing: Can Two Tobacco Giants Save Themselves by Merging?

DealBook Briefing: Can Two Tobacco Giants Save Themselves by Merging?

Good Wednesday morning. We’re back from our break a little earlier than expected. Here’s today’s news. (Was this email forwarded to you? Sign up here.)

Altria and Philip Morris International said yesterday that they were in talks to recombine — over a decade after splitting — as they confront slowing cigarette sales and competition from e-cigarettes.

The companies are considering an all-stock merger, which would recreate the old Philip Morris. The company separated its domestic arm, now known as Altria, from its international business in 2008.

Here’s what’s under discussion, according to the WSJ:

• Altria shareholders would receive just under 42 percent of the combined company, with Philip Morris shareholders receiving the remainder.

• The companies would share top management roles and board seats.

Driving the talks are non-cigarette products. Altria and Philip Morris have agreed to jointly sell IQOS, an e-cigarette product, in the U.S. And Philip Morris could help widen the international distribution of Juul, the popular vaping device in which Altria has invested nearly $13 billion.

A deal could be reached within weeks, the WSJ reported. But talks could still fall apart.

News of the merger talks received a frosty reaction. Philip Morris shares fell nearly 8 percent and Altria’s dropped 4 percent, as shareholders worried about regulators blocking the deal, according to the FT. Tom Buerkle of Breakingviews writes that the companies may have waited too long to get back together.

More: An outbreak of a lung disease among American teenagers may point to holes in the regulation of vaping products.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin, Michael J. de la Merced and Jamie Condliffe.

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The family that owns the maker of OxyContin, the prescription painkiller at the heart of the opioid crisis, has proposed ceding control of the drug company and paying $3 billion of their own money to settle thousands of lawsuits tied to the opioid epidemic, Jan Hoffman of the NYT reports.

Purdue Pharma would file for bankruptcy, and turn itself into a “public beneficiary trust” that would steer any profits from drug sales, including OxyContin, to the plaintiffs, Ms. Hoffman reported, citing a person familiar with the negotiations. It would also promise to provide, without cost, addiction treatment drugs that it’s currently developing.

A total settlement pool of $10 billion to $12 billion would be on the table, Ms. Hoffman writes. That would include the $3 billion Sackler contribution.

“Purdue would be the first among some two dozen manufacturers, distributors and retailers of prescription opioids facing lawsuits nationwide to settle all claims against it for its role in a public health crisis that has killed hundreds of thousands of people” if a settlement is approved, according to Ms. Hoffman.

But it’s not a done deal. Negotiators were dismayed that the news had leaked, and fretted that the publicity could compromise delicate talks.

More: The $572 million ruling against Johnson & Johnson in an Oklahoma lawsuit over its role in the opioid crisis was another blow to the company’s reputation. But investors were prepared for worse.

If you can’t keep up with what’s happening, you are surely not alone.

• On Friday, Beijing said it would raise taxes on American goods, and President Trump responded by saying he would increase taxes on all Chinese goods and demanding that American companies stop doing business with China.

• Two days later, Mr. Trump said that he had had “second thoughts” about escalating the dispute. Within hours, the White House released a statement saying that the president regretted only that he had not raised tariffs higher.

• Then Mr. Trump asserted that Chinese officials had called, and that trade talks would resume soon.

• But China says those phone calls never happened, Alan Rappeport of the NYT reports. Treasury Secretary Steven Mnuchin has said that “there has been communication going on” but did not comment on any phone calls.

Mr. Trump’s behavior could risk killing a trade deal. “I think the president’s actions and words are making it increasingly difficult for a deal to come together,” Wendy Cutler, a former U.S. trade negotiator, told Politico. “He’s undermining the credibility of his negotiators.”

A former Federal Reserve official has sparked a furious debate over whether the central bank should allow President Trump’s policies to hurt the economy in order to undermine his re-election chances.

“Trump’s re-election arguably presents a threat to the U.S. and global economy,” the official, Bill Dudley, the former president of the New York Fed, wrote for Bloomberg Opinion.

Mr. Levandowski downloaded more than 14,000 files containing information about Google’s autonomous-vehicle research, including sensor designs, before leaving the company in 2016, according to the indictment. Prosecutors said he then transferred them to his personal laptop. Mr. Levandowski joined Uber later that year.

The indictment follows a settlement between Uber and Alphabet’s Waymo in a trade secrets case last year. Waymo had accused Uber, Mr. Levandowski and others of stealing self-driving car technology. But Mr. Levandowski’s situation was referred to federal prosecutors.

Mr. Levandowski pleaded not guilty to all charges after turning himself in at the federal courthouse in San Jose. He put up $300,000 cash, and his parents and a friend posted their houses as collateral for bail. If convicted, he could face 10 years in prison and a $250,000 fine for each count.

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