On Monday's Market Foolery, host Chris Hill, Motley Fool One analyst Jason Moser, and Stock Advisor Canada analyst Taylor Muckerman discuss the highs and lows of a potential merger in the tobacco industry.
While France celebrates Bastille day, today is Merger Monday with Reynolds American (NYSE:RAI) in merger talks with Lorillard (UNKNOWN:LO.DL). Chris thinks that combined, the two companies could be a pretty formidable competitor to Philip Morris and Altria Group. He asks how nervous Altria group is right now. In his answer, Jason explains that global tobacco use is on the rise, although it's on the decline domestically. He thinks that over time tobacco use will wane. Even though it may look like a good industry right now, Jason looks at the long term and eventual death of the industry. Taylor looks at e-cigarettes as the new tobacco product. Their advantages, he explains, make e-cigarettes the long-term winner of the industry. Then the three look at the legalities of the industry with a Lorillard and Reynolds American merger, and why the tobacco industry could be a great dividend play.