MANILA -- Philip Morris International Inc. said Thursday its Philippine unit and the local industry leader Fortune Tobacco Corp. are combining in a company that will control about 90 percent of country's lucrative cigarette market.

Tycoon Lucio Tan, one of the richest Filipinos and Fortune Tobacco's current head, will be chairman of the new company while Philip Morris will manage day-to-day operations, Philip Morris said in a statement.

It said each party will hold an equal interest in the new business, but no other financial details were announced. About 85 billion cigarettes are sold in the Philippines each year, according to Philip Morris.

The World Health Organization says smoking is the single biggest preventable cause of deaths worldwide, claiming about 5 million lives a year. In the Philippines, as of 2002, WHO said about 60 percent of men and 40 percent of adolescent boys smoke. Every year, there are about 20,000 smoking-related deaths in the country and WHO estimated that tobacco use drains nearly 20 percent of income in the households of Filipino smokers.

The deal will allow creation of a portfolio of strong brands and will benefit the Philippine economy by boosting development and expansion of tobacco growing, exports and investment, said Matteo Pellegrini, president of Philip Morris' Asian operations.

"This transaction is a tremendous strategic fit for our business that will cement our leadership in Southeast Asia," Pellegrini said.

Fortune Tobacco is one of the five largest privately owned cigarette companies in the world and competes mainly in the low-end market with its leading brands Fortune and Champion. It holds about 60 percent of the Philippine market and Philip Morris has 28 percent.

Philip Morris' premium priced brands include Marlboro, the world's No. 1 selling cigarette, and Philip Morris. In 2009, it held an estimated 15.4 percent of the total international cigarette market outside the U.S. (AP)