Marlboro cigarette maker Philip Morris International Inc (NYSE:PM) has confirmed discussions for a possible mega-merger with rival Altria Group Inc (NYSE:MO).

In a statement on Tuesday, Philip Morris confirmed talks were ongoing for an all-stock “merger of equals” between the world’s two biggest tobacco firms, although stressed that there could be “no assurance” that a deal would take place.

The merger comes as both companies, along with the rest of the tobacco industry, attempt to move away from traditional ‘combustible’ products such as cigarettes and toward electronic and vapour alternatives amid tighter regulations on smoking.

Part of this strategy emerged in December last year when Altria acquired a 35% stake in e-cigarette company JUUL Labs for US$12.8bn.

The merger would be a homecoming of sorts as Altria was created from Philip Morris in 2003 as part of a rebranding exercise before being spun out.

It also follows the acquisition of Reynolds, the US maker of Camel cigarettes, by London-listed giant British American Tobacco PLC (LON:BATS) for around US$49.4bn in 2017.

The news, however, received a mixed response from investors, with Philip Morris shares down 6.2% at US$73 in early trading in New York while Altria’s stock jumped 8.2% to US$51.

Meanwhile, in London, shares in BAT dropped 1.8% to 2,907.5p following the news.