Altria Buys 35 Percent Stake In E-Cigarette Maker Juul

Altria Buys 35 Percent Stake In E-Cigarette Maker Juul

Altria Buys 35 Percent Stake In E-Cigarette Maker Juul

Marlboro maker Altria announced on Thursday that it invested $US12.8 billion ($18 billion) in Juul, valuing the firm at roughly $US38 billion.

Altria is the parent company for Philip Morris USA, maker of the some of the biggest names in cigarettes, including Marlboro, L&M and Virginia Slims.

Altria is buying 35% of San Francisco-based Juul, valuing it at £38bn.

Juul employees may be celebrating this holiday season a little harder this year due to a huge $2 billion bonus they will be getting from cigarette company Altria.

Altria, which is focused on the US market after spinning off Philip Morris International Inc.in 2008, will get one-third of the seats on Juul's board upon antitrust clearance.

"We understand the controversy and skepticism that comes with an affiliation and partnership with the largest tobacco company in the US", Juul CEO Kevin Burns said in a statement provided to TIME.

The Food and Drug Administration (FDA) in September gave Juul 60 days to prove the vaping giant can keep the nicotine devices away from children, a threat that is still developing. Part of the agreement also included assurances by Juul that it would "accelerate its mission" to convert adult smokers, according to a news release from the companies. "As we have said before, our intent was never to have youth use Juul products", Burns writes. However, despite these risks, approximately two-thirds of JUUL users aged 15-24 do not know that JUUL always contains nicotine.

Multiple reports suggested that some Juul employees have been upset about the rumored Altria investment.

Also this month, Altria announced a $1.8 billion investment in Cronos Group Inc CRON.TO , which could give it up to 55-percent ownership of the Canadian cannabis producer. But there are concerns around creating new nicotine dependence, as teens are drawn to appealing candy and dessert flavour varieties.

Altria said this month it would discontinue some of its e-cigarette brands, based on their financial performance and will take a related pre-tax charge of $200 million in the fourth quarter. "It's growing so fast that the cigarette companies like Altria need to look at a way to mitigate not only cigarette use but also think for the future".

"Altria has no interest in reducing the number of people who smoke cigarettes", the group's president, Matthew Myers, said in a statement.

The tobacco giant, which had revenues of $25.6 billion in 2017, plans $500 to $600 million in annual cost savings through job cuts and other measures.

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