Marlboro owner Altria buys a third of vape company Juul

Muriel Colon
December 23, 2018

Altria, the leading USA cigarette manufacturer, announced Thursday it will make a $12.8 billion investment in e-cigarette maker Juul - giving it a 35 percent stake in what had been perhaps its most worrisome competitor.

"Altria's interests are served by maximizing sales and profits from both the cigarette and e-cigarette markets, and they have every reason to push Juul to market its products in a way that does the least damage to the cigarette market".

The money is part of a payment in Altria's purchase of a 35 percent stake in Juul for $12.8 billion.

The marriage between a traditional tobacco giant and Juul underlines how the fast-growing e-cigarette is changing tastes among smokers.

Altria executives said on the call that the deal has provisions that would prevent competitors from buying a large stake, but that nothing bars Juul from partnering with other companies internationally.

"But over the course of the last several months we were convinced by actions, not words, that in fact this partnership could help accelerate our success switching adult smokers", Juul said.


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.

The deal has raised eyebrows given Juul's long-stated mission of giving adult smokers a healthier alternative to cigarettes.

But Juul, founded in 2015, has nevertheless found itself at the center of controversy over the appeal of its products to young people. The Altria deal makes Juul more valuable than Airbnb Inc. or Elon Musk's SpaceX, though still less than Uber Technologies Inc.

Many Juul employees were said to be upset when rumors of the investment emerged last month. Altria has also agreed not to sell or transfer any Juul shares for six years from the closing of the deal. CNBC reported the news earlier Thursday. But there are concerns around creating new nicotine dependence, as teens are drawn to appealing candy and dessert flavour varieties.

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. "But intent is not enough, the numbers are what matters, and the numbers tell us underage use of e-cigarette products is a problem". That includes its investment in Canadian cannabis company Cronos Group Inc., which gave it a 45 per cent stake and an option to take majority control in the future.

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