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Shares of tobacco giants Philip Morris International (PM) - Get Free Report  and Altria Group  (MO) - Get Free Report  both fell on Tuesday after the two rivals confirmed they are in discussions over a potential all-stock deal as traditional tobacco smoking across the globe declines.

Philip Morris confirmed in a statement on Tuesday that it is in discussions with its former partner, noting there is "no assurance that any agreement or transaction will result from these discussions. Additionally, there can be no assurance that if an agreement is reached, that a transaction will be completed."

A merger would reunite Philip Morris International and Altria more than a decade after the two companies split.

Altria spun off Philip Morris in 2008 and has remained a largely U.S.-focused company, selling Marlboro cigarettes domestically, while Philip Morris has focused on selling cigarettes overseas. Both companies have also dabbled in e-cigarettes and other non-combustable tobacco products as global tobacco sales have tapered off.  

Altria in particular has been moving to diversify away from cigarettes and tobacco products, earlier this year investing $1.8 billion for a 45% stake in Canadian cannabis company Cronos (CRON) - Get Free Report , and another $12.8 billion for a 35% stake in popular e-cigarette producer Juul. 

Philip Morris, meantime, has been doing the same thing. This summer the company licensed heated tobacco product IQOS to Altria. The Food and Drug Administration earlier this year cleared iQOS to be sold in the U.S.

Shares of Philip Morris fell nearly 7% to $72.47 in trading on Tuesday. Shares of Altria Group dropped 3.97% to $45.26.

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