Philip Morris in talks to merge with Altria

Philip Morris International Inc and Altria Group Inc said on Tuesday they were in talks for an all-stock merger, potentially reuniting the tobacco giants after more than a decade.

Altria's shares rose over 8% in early trading, while Philip Morris fell 5.5%. At current prices, a merger of the two would create a company with market value of more than $200 billion. In 2008, Altria spun off the Philip Morris International unit in a move aimed at unlocking the value of the fast-growing unit.

The news comes a day after Wells Fargo analyst Bonnie Herzog said e-cigarette company Juul Labs Inc, in which Altria owns a 35% stake, will have an ideal partner for its international expansion in Philip Morris.