Philip Morris To Pay $2.7 Bln Cash To Altria To End Commercial IQOS Deal

(RTTNews) - Philip Morris International Inc. or PMI (PM), a tobacco company, said on Thursday that it has inked a deal with Altria Group, Inc. to end the their commercial tie-up that covers the smoke free product- IQOS in the U.S.

The PMI will pay a sum of $2.7 billion in cash, of which $1 billion was paid at the inception of the agreement using available cash. The remaining $1.7 billion, and interest, will be paid by July 2023 latest.

The deal will allow PMI to have the full rights to commercialize IQOS in the country after April 30, 2024.

Previous deal between two parties for the commercialization of heat-not-burn products in the U.S., had allowed Altria to own certain intellectual property rights related to the IQOS technology that were developed prior to PMI's spin-off in 2008.

Following IQOS's authorization for sale in 2019, the deal covered an initial five-year commercialization term for the product in the U.S. through April 2024, with potential renewal, covering a second 5-year term through April 2029.

"The company views IQOS as a very substantial growth opportunity in the U.S. smoke-free market, whose retail value represents around 60% of that for the rest of the world, excluding China," PMI said in statement.

Pro forma total IQOS users at the PMI's second quarter-end are estimated at around 19 million, up by 3.2 million, versus last year, of which approximately 13.2 million had switched to IQOS and stopped smoking.