Altria announced a $2.75 billion investment in rival electronic cigarette startup NJOY just days after selling its share in Juul, a problematic maker of electronic cigarettes.
The Virginia-based firm announced on Monday that the creator of Marlboro would acquire full ownership of NJOY’s e-vapor product line, including its pod-based e-vapor product ACE.
Altria CEO Billy Gifford said, “We believe we can responsibly accelerate U.S. adult smokers and competitive adult vaper adoption of NJOY ACE in ways that NJOY could not as a solo firm.
The agreement also included an extra $500 million in cash payments subject to NJOY Holdings Inc., a Scottsdale, Arizona-based company, receiving regulatory approval for some of its products.
Just a few days prior, Altria announced it was exchanging a license to some of Juul’s heated tobacco intellectual property for a minority share in Juul Labs.
Altria said that its investment in Juul had a $250 million carrying value and an estimated fair value at the end of the previous year.
The business expects to report any amounts as a special item and remove them from adjusted diluted earnings per share when it records the agreement’s financial impact in the first quarter of 2023.
Gifford stated on Friday that Altria made the right choice in choosing the swap.
According to Gifford, Juul confronts considerable legal and regulatory obstacles and uncertainties, many of which could last for many years.
Juul achieved settlements in thousands of claims involving their e-cigarettes in December.
More than 8,000 lawsuits were filed against the business by Juul users, their families, school systems, local governments, and Native American tribes.
Most of those lawsuits, consolidated in a federal court in California pending several bellwether trials, were resolved due to the settlement.
The settlement’s financial details weren’t made public.
On the strength of the success of flavors like mango, mint, and creme brulee, Juul shot to the top of the U.S. vaping market more than five years ago.
Nonetheless, teens’ usage of the product, some of whom developed addictions to Juul’s high-nicotine pods, contributed to its rise.
The corporation was primarily accused by parents, educators, and politicians of the rise in underage vaping, which now includes dozens of flavored e-cigarette brands that are the preferred choice among teens.
Juul discontinued its flavors in 2019 and stopped all U.S. advertising due to legal action and government restrictions.
A few months after striking a contract with Japan Tobacco to support its efforts to introduce a heat-not-burn cigarette to the U.S. market, Altria has expressed interest in Juul’s heated tobacco intellectual property.
In October, Altria announced it was forming a new partnership with Japan Tobacco to market cigarette substitutes created by both businesses for American smokers. The partnership’s initial step will be to get Japan Tobacco’s Ploom, a tiny handheld device that heats tobacco without burning it, approved by American regulators.