Philip Morris Stock jumped higher

Shares of tobacco giant Philip Morris jumped 5.2% higher on Wednesday following news that merger talks between them and Altria have been called off. Rather than merge, each company said they would be working on their own smokeless tobacco products for the U.S. markets.

While the companies did believe that a merger could bring cost synergies and incremental revenue gains, they were unable to reach a consensus, and so put an end to merger talks.

Separately Kevin Burns, the CEO of Juul Labs, which is 35% owned by Altria, stepped down from his position and will be replaced immediately by K.C. Crosthwaite, the previous growth and strategy officer for Altria. Altria paid $12.8 billion just last December for its stake in Juul Labs, believing at the time that the e-cigarette and vape market was ripe for expansion.

Burns has stepped down due to the pressures created by the crackdown on vaping and e-cigarettes in the U.S. by the Food and Drug Administration. Juul is also the subject of a criminal investigation in California after hundreds of people have been diagnosed with lung disease related to vaping, and at least eight people have died.

Analysts said they weren’t surprised that merger talks between the two companies have come to an end, given the length of time and the continued attacks on vaping and e-cigarettes from the FDA. They said talks could resume once the environment for e-cigarettes improves.

Philip Morris will be focused on its IQOS smokeless tobacco product, which has gained premarket approval from the FDA, and is not an e-vapor product.

Philip Moris 5 day chart