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.
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