Tobacco Giant Altria Takes $13 Billion Stake In Juul Labs

Marlboro maker to invest $13bn in Juul e-cigarettes

Altria's products, however, have lost significant ground to e-cigarette maker Juul Labs Inc over the past year, as have e-cigarette brands from other major tobacco companies.

The move represents a 35-percent economic interest in Juul, valuing the San Francisco-based vapor company at $38 billion.

"We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes", Altria COE Howard Willard said in a statement.

Under the agreement, Altria's only entry into the e-cigarette market will be through Juul for at least six years.

Altria also brings years of lobbying expertise in Washington that could benefit Juul as the company navigates heightened federal scrutiny over its products' popularity among teenagers. The WSJ had earlier reported on the discussions. "But intent is not enough, the numbers are what matters, and the numbers tell us underage use of e-cigarette products is a problem". In a statement, Juul Labs CEO Kevin Burns described the deal as "seemingly counterintuitive", before arguing that the massive, all-cash deal will actually help in the company's mission.

The agreement lays out requirements for Altria to make Juul products available at retail stores, and limits Altria's ownership stake to 35 per cent, enabling Juul to maintain control, Burns added. They have been pitched to adult smokers as a less-harmful alternative to cigarettes, though there's been little research on the long-term health effects or on whether they help people quit.

Youth consumption of e-cigarettes "is a big problem that needs to be resolved and if it's not resolved, it's going to put the whole category at risk, including for adults", he said. A study this week from the University of MI found that teen nicotine use has hit record highs over the past year, with more than 20 percent of teens reporting some use.

Juul said Thursday that it recently began to take actions meant to prevent underage vaping.

The U.S. Food and Drug Administration is ramping up efforts to restrict the sale of flavored e-cigarettes which appeal largely to children.

Juul has boosted its own lobbying spending, spending United States dollars 890,000 so far in 2018, according to the Center for Responsive Politics.

However, that is dwarfed by Altria's spending of more than $7m this year, making it the biggest spender in the U.S. tobacco industry. Altria had been watching Juul's growth for awhile, finding it continually exceeded expectations, and sees global growth as a main rationale for the deal. In many ways the company positioned itself as the foe of big tobacco, saying in job postings that it was "driving innovation to eliminate cigarettes".

Marlboro maker Altria announced on Thursday that it invested $US12.8 billion ($18 billion) in Juul, valuing the firm at roughly $US38 billion. The company has quickly grown both revenue and share, and today represents approximately 30 percent of the total USA e-vapor category.

Some analysts on Thursday expressed concern that Altria was paying too high of a price.

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

Altria will apply its logistics and distribution experience to help Juul expand its reach and efficiency and Juul will have the option to be supported by Altria's sales organization, which covers approximately 230,000 retail locations.

The investment comes about two weeks after Altria stepped into the cannabis market with an investment of around $2 billion in Cronos Group, the Canadian medical and recreational marijuana provider.

Altria also announced cost cuts of about $500 million to $600 million a year by the end of 2019.

Related News:



Most liked

'Bright Night' could be Samsung's own version of 'Night Mode'
Rumours suggest Samsung will announce the Galaxy S10 on February 20th, before the official start of Mobile World Congress (MWC). The feature was found by the XDA Developers website and is being said to arrive as a part of Samsung Galaxy S10 .

China says Canadian woman being punished for working illegally
Meng has since been released on bail and is to return to court early next year for what could be an extended legal proceeding. China detained former Canadian diplomat Michael Kovrig and China-based business consultant Michael Spavor on December 10.

Trump Moves Towards Shutdown Over Wall Funding
House Majority Leader Kevin McCarthy outside the White House, said Trump wanted any spending agreement to secure the U.S. border. Right-wing radio host Rush Limbaugh expressed similar dismay at the prospect of Trump conceding on the wall.

Trump Wants Feds To 'Feel The Market' Instead Of Using 'Meaningless Numbers'
Fiorina said talk of a recession is "premature", but the economy may stagnate or get "slightly worse" next year. For a President who likes to boast about his ability to create jobs, this might make that task a lot harder.

The Trump Foundation is closing, but it’s not off the hook
Trump's foundation in 2013 gave $25,000 to And Justice For All, the political committee for Florida Attorney General Pam Bondi. Underwood's lawsuit against Trump and his three oldest children for violating state charity law will move forward.

‘Laverne & Shirley’ star Penny Marshall dies at 75
Brooks praised her for making "films which celebrated humans" and for her guiding influence to young comedians and writers. But Marshall's legacy will long outlast many of her male peers, and we're truly grateful for the films she gifted to us.

Huawei launches Nova 4 with hole-punch display and 48MP rear camera
Huawei has officially lifted the veil off the Nova 4 , its new mid-range smartphone with an all-screen display. As far as front-facing camera is concerned, the Nova 4 is expected to offer a massive 25MP selfie camera.

OnePlus 6T McLaren Edition Could Retail For More Than RM3300 In Malaysia
OnePlus has launched its McLaren Edition of its flagship 6T smartphone after launching its Thunder Purple colour variant recently. It'll cost you £649 (£70 more than the 8/256GB OnePlus 6T) and will be available to buy on Thursday 13th December at 9am.

Indiana high school football player confessed to killing pregnant cheerleader, affidavit says
Trejo told investigators he had been planning the killing for about a week and had not told anyone. He told Rouhselang's mother that she never showed up for a planned meeting. "I took her life".

After May asks for help, Germanys Merkel says no more Brexit negotiations
Theresa May will be at the will of Conservative MPs in the poll, which will take place between 6pm and 8pm tonight (Wednesday). To cling on to power May will need the support of more than 50% of the 315 Conservative MPs to stay in office - 158 in total.

Brexit chaos grows as Theresa May's colleagues seek to oust her
May cancelled a trip to Dublin on Wednesday for talks with Irish Prime Minister Leo Varadkar amid the leadership challenge. A British Conservative Party official says Prime Minister Theresa May will face a no-confidence vote from party lawmakers.

Huawei executive gets bail in case rattling China ties
Chinese officials have expressed outrage over the arrest and observers have warned about the risk of retaliation. Meng Wanzhou , on bail following her detainment on behalf of...

Manchester City's Raheem Sterling backed by players' union over racial abuse claims
Neville said it was a "miracle" Sterling has been able to become such an integral player for City and England . Wing has since lost his job and is one of four Chelsea supporters to have been suspended by the club .

Theresa May's Brexit deal is 'huge step into unknown', MPs say
Labour is lining up to join Tory rebels and the Democratic Unionist Party in voting down Theresa May's Brexit deal on Tuesday. However, her Brexit minister Stephen Barclay told the BBC on Sunday that May will push ahead with the vote.

Michigan GOP Commences Restricting Power Of Approaching Democratic Leaders
If you vote for this, shame on you. "If you vote for this, shame on you, you will go down in history as a disgrace", Hintz said. But the GOP in 2010 gerrymandered the state's legislative districts, so it now holds a 63-47 majority.