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Altria Group Purchases 35% Stake in Juul for Nearly $13B

January 04, 2019

Altria Group Purchases 35% Stake in Juul for Nearly $13B

In December 2018, Altria Group - the maker of Marlboro cigarettes - announced it would buy a 35% stake in Juul Labs for close to $13B. The move could bridge the gap between traditional tobacco smokers and vapers.

The deal puts a value of $38 billion on Juul (based in San Francisco), more than double the value estimated in July. This increase is what Altria sees as its next step in evolution, as the number of cigarette smokers has declined in the United States.

What does this mean for Juul?

This investment could make Juul more prominent in terms of distribution in convenience stores and other retail outlets. Juul will also have major advertisement advantages via cigarette packages and direct mailers to Altria’s customers.

Altria also has lobbying power in Washington, which could prove beneficial to Juul as they are being targeted by the federal government due to fear that flavored vape products may appeal to younger vapers.

Terms of the Deal

  1. Altria may not purchase more Juul shares above what it already has acquired.
  2. For a period of six years after the deal is made, Altria will not sell or transfer any shares of Juul
  3. Altria will be able to nominate directors via an antitrust, making up one-third Juul’s board.
  4. Altria will also participate in the e-vapor category through Juul only for a minimum of six years

Currently, Juul represents 30 percent of all U.S. e-cigarette products.

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