Five years after dividing their business into U.S. and international markets, Altria (NYSE:MO) and Philip Morris International (NYSE:PM) are getting the band back together in the field of e-cigarettes.
In the face of heightened regulation of traditional cigarettes both in the U.S. and internationally, both companies have been researching nicotine delivery systems that are less harmful to the user. Altria has chosen to go the "e-cigarette" route, in which a battery-operated device heats and vaporizes a nicotine-laced liquid, creating a vapor that can be inhaled. Philip Morris has focused on developing an e-cigarette that heats, rather than burns, tobacco -- the heated, nicotine-containing air can be inhaled.
In both cases, the aim is to avoid combustion of actual tobacco, so as to hopefully avoid creating the harmful carcinogens that are generated by the combustion process.
Today, the companies announced a plan to cooperate on licensing and distributing their respective e-cigarette "and other innovative" products. Specifically, Altria is allowing Philip Morris to sell its e-cigarette products internationally, while, in turn, Philip Morris is giving Altria licenses to commercialize two of its "heated tobacco" products in the U.S. The parties will also cooperate on "scientific assessment, regulatory engagement and sharing improvements" in relation to all of these products.
The popularity of e-cigarettes has grown swiftly, from thousands of users in 2006 to several million worldwide today. In August, Altria's NuMark subsidiary launched its first e-cigarette under the MarkTen brand with a test market in Indiana and plans to expand into Arizona.
-- Material from The Associated Press was used in this report.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.