Merger update from Faber | MO Message Board Posts

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Msg  12621 of 12631  at  9/11/2019 4:47:59 PM  by

Korynd


 In response to msg 12619 by  Alfalfa1234
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Re: Merger update from Faber

Anything less than .718 means a dividend cut for MO shareholders.
Yes, and MO shareholders are not going to get anything close to that.
a favorable vote on the merger will be a hard sell with a significant cut to the dividend for MO investors.
I agree it might be. But management is going to extol the virtues of international growth access, in the face of an increasingly declining US cigarette market. And an underlying risk of rejecting the merger with PM will be that if e-vapor retains its huge tax advantage in the US, it could cause major and damaging declines in cigarettes volumes anyway, thus threatening the longer term viability of the dividend anyway.
I agree completely. I'm long both MO and PM, but own more MO. Not going to be happy with a dividend cut, especially with MO trading at such a discounted valuation in comparison to PM.
You don't think PM is undervalued as well? There are many PM shareholders that won't even want to give MO the .57 shares per share of PM, believing their shares are more undervalued than MO. This is why something like an ownership split of 59/41 is likely the only option, which gives MO shareholders .57 shares of PM for every one of MO. Both MO & PM shareholders then have to accept the market valuation of 8/23 before the merger rumors went public.
Korynd: Good to see you coming around as to the merits of this merger possibility 
I wouldn't say I'm coming around to anything, or that the merger has a lot of merit. However, I believe a merger might be necessary, assuming the cash flow difficulties at PM and the revenue issues at MO are increasing. If so, a merger & dividend cut may be the best way to help alleviate them in the near term, rather than take other negative actions individually.


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