Altria spending $12.8B for a stake in e-vapor company JUUL

Altria spending $12.8B for a stake in e-vapor company JUUL

Marlboro cigarette maker Altria Group Inc MO.N is nearing an agreement to buy more than a third of Juul Labs Inc, valuing the e-cigarette startup at $38 billion, people familiar with the matter said on Wednesday.

Willard said he favored setting 21 as the minimum age nationally for purchasing the products.

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.

The deal is making Juul founders Adam Bowen and James Monsees the first e-cigarette billionaires.

"Research shows youth who vape are four times more likely to smoke deadly cigarettes". A typical JUUL cartridge, or 'pod, ' contains about as much nicotine as a pack of 20 regular cigarettes.

Altria spending $12.8B for a stake in e-vapor company JUUL

Koval is not exaggerating.

There's a standstill agreement in place, meaning Altria won't increase its ownership share of Juul, nor will it sell or transfer its shares for six years. However, despite these risks, approximately two-thirds of JUUL users aged 15-24 do not know that JUUL always contains nicotine.

Meanwhile, regulators and watchdogs are increasingly concerned about Juul's impact on nicotine use among teens. The company also deleted its social media accounts. "This is a really crucial antitrust case".

The deal, announced on Thursday, values San Francisco-based Juul at United States dollars 38 billion, more than double the roughly USD 16 billion valuation it achieved in a July private funding round, highlighting what Altria sees as a growth path in the face of declining cigarette sales. They can not be converted to voting shares without federal approval.

Juul CEO Kevin Burns described the Altria investment as "unlikely" and said he was "skeptical" that a conventional tobacco company could align with its objectives.


"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.

Altria will provide Juul access to its premier innovative tobacco products retail shelf space, allowing Juul's tobacco and menthol-based products to appear alongside combustible cigarettes.

Juul employees are about to get some hefty bonuses, thanks to a new investment from one of the largest tobacco companies in the world.

With smoking in decline, the deal furthers Altria's push away from cigarettes and into higher-growth businesses.

Juul will put $2 billion of its recent $12.8 billion funding round raised from tobacco giant Altria toward employee bonuses, according to a report from CNBC.


While the valuation that Altria's Juul stake implies may raise some eyebrows, King thinks it's a good sign for this new area of the market, as new products represent a way forward for an industry that has seen a decline in traditional cigarette use in the U.S.

Balto agrees. "You have to be tremendously concerned when a monopolist acquires a rival", he said.

"In the battle with the FDA, Juul is a novice".

"This is just a public health nightmare". Along with Burns' statement, the average payout of $1.3 million might go some way towards smoothing out employee concerns. That works out to $1.3 million a head.


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