MANILA Feb 24 (Reuters) - The Philippine unit of Philip Morris International (PM.N) will merge with unlisted Fortune Tobacco Corp, giving it access to the lower-priced cigarette market, an industry source said on Wednesday.
Philip Morris Philippines Manufacturing Inc and Fortune Tobacco have a combined share of about 90 percent of the local tobacco market.
Fortune is owned by one of the country's richest men Lucio Tan.
The merged company will be called PMFTC, with Philip Morris acquiring a slim majority control of the new firm, the source, who asked not to be identified for lack of authority to announce the merger, told Reuters.
Tan will become chairman of the merged firm and his group will take over the audit and finance functions of PMFTC. Philip Morris will handle management, operations and marketing functions.
Philip Morris Philippines will hold a press briefing on Thursday at around 0400 GMT.
Philip Morris, which sells Marlboro cigarettes and is the world's largest non-state-owned tobacco firm, has dominated the high-end cigarette market in the Philippines for years.
Fortune Tobacco, on the other hand, is the top player in the low-end cigarette segment.
"It has good synergy because it's complementary. Philip Morris has never succeeded in penetrating the lower-priced brackets and Fortune never entered the high-end market," the source said.
Philip Morris reported a 5 percent rise in profit for the quarter ended Dec. 31, beating analysts' estimates. The company has been able to take advantage of growing cigarette demand in emerging markets, even as higher taxes have taken their toll on demand in parts of Western Europe. [ID:nN11184009]
Apart from the Philippines, Philip Morris also operates in Japan, Italy, Germany, Russia and Turkey -- its key markets, according to the company's website.
(Reporting by Rosemarie Francisco; editing by Elaine Hardcastle)