Virginia-based Altria Group, one of the world’s largest tobacco companies, is spending billions of dollars for a stake in Juul Labs, the largest e-cigarette company in the U.S., according to reports.

Altria, formerly known as Philip Morris, produces Marlboro cigarettes and other tobacco products. It is looking to get a foothold in the e-cigarette market, as traditional cigarette smoking has declined significantly over the years.

Juul, a private company, controls nearly 70% of the e-cigarette market,  the largest share of any company in this space. Juul markets and sells flavored e-cigarette vaporizers at a variety of retail locations. Its sales grew 800% between 2017 and 2018.

Here’s what you need to know:

  • Altria is investing a total of $12.8 billion in Juul, a sum that’s worth more than a third of the company.
  • The investment puts Juul’s valuation at around $38 billion.
  • $2 billion of Altria’s investment will go directly to Juul’s 1,500 employees as a bonus.
  • Altria’s market cap of $103 billion has fallen around 13% over the past year, according to the New York Times.

The global e-cigarette market is expected to increase to more than $86 billion by 2025 from about $14 billion in 2017, according to industry analysts. Meanwhile, the total number of adult smokers in the U.S. decreased to 15.5% in 2016, or around 38 million people, from 20.9% in 2005, according to the Centers for Disease Control.

There are some butts about it

Juul has recently faced scrutiny from the Food and Drug Administration as “vaping” among teenagers has soared.

Specifically, the FDA is investigating Juul’s marketing techniques as they relate to minors. As a result, in November Juul suspended sales of some of its products.

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