Marlboro cigarette maker Philip Morris International Inc. ( PM ) is reportedly exploring a potential sale of its U.S. cigar business. The company added the U.S. cigar business via its massive $16 billion acquisition deal with Swedish Match AB.

The move accelerates Philip Morris' ( PM ) transition toward smoke-free products. Benzinga has contacted Philip Morris ( PM ) for comment on the potential deal and will update when we receive a response.

In July, Philip Morris ( PM ) announced a $600 million investment through one of its U.S. affiliates to establish a manufacturing facility in Aurora, Colorado.

The new plant, expected to create 500 direct jobs and generate $550 million in annual economic impact, will also add 1,000 indirect jobs as it produces Swedish Match ZYN nicotine pouches to meet the rising demand for smoke-free products among legal-age consumers.

In August, Philip Morris ( PM ) revealed an investment of $232 million through one of its Swedish Match affiliates to expand the production capacity of its manufacturing facility in Owensboro, Kentucky. 

"We are accelerating our mission toward a smoke-free future, working with our U.S. affiliates to move adults away from cigarettes and other traditional tobacco products by providing better alternatives," said Stacey Kennedy, CEO of PMI's U.S. business.

The Bloomberg report adds the company is reportedly working with advisers to gauge interest, seeking over $1 billion for the asset.

A company representative confirmed that a strategic review of the U.S. cigar business was announced in 2024 but did not provide further updates. The potential divestment aligns with Philip Morris's ( PM ) broader efforts to reduce its dependence on traditional tobacco products as global smoking rates decline.

Despite its legacy brands like Marlboro and Parliament, Philip Morris ( PM ) is increasingly focused on alternatives such as IQOS, its heated tobacco product, which overtook Marlboro in sales last year, particularly in markets like Japan, the Bloomberg report adds.

The smoke-free business accounted for 40% of the company's total net revenues in the fourth quarter. By 2030, the company aims to have smoke-free products account for two-thirds of its revenue.

Price Action: PM stock is up 1.27% at $157.25 at the last check on Monday.

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