Juul: Valuation falls further as legal woes mount

Cigarette giant Altria has again slashed the value of its investment in San Francisco vaping firm Juul, with its original $12.8 billion stake falling to $4.2 billion, Altria officials said Thursday.

Altria recorded a writedown of over $4 billion on the Juul deal in the fourth quarter of 2019, largely due to a sharp increase in the number of legal cases against Juul and the expectation that more will be filed. The number of lawsuits has increased 80% since Oct. 31, Altria said, and many of them name Altria as a codefendant.

The new figures suggest Altria values Juul at about $12.5 billion, far less than the $38 billion value Juul had in 2018, when Altria made its investment.

“We are disappointed in the performance of our Juul investment in 2019,” Altria CEO Howard Willard said during a quarterly earnings call with analysts. “That is reflected in the most recent valuation, which is substantially below what we had expected.”

Altria recorded a writedown of $4.5 billion on Juul in the third quarter.

Altria revised the terms of its deal with Juul, saying it will continue providing regulatory support as Juul prepares its application for FDA review. But after

March, Altria will end all other services for the vaping company, including sales and distribution support, which had been part of the original deal.

Juul remains the vaping market leader, despite a drop in market share from 48% to 44%, Altria executives said.

Willard noted that the vaping sector and Juul took a hit from the spate of vapingrelated lung illnesses that began last summer, which prompted federal health officials to recommend people stop using all vaping products, even though many of the illnesses were later found to be linked to blackmarket THC products.

“As we continue to reset the vapor category, we are committed to advancing the longterm potential for harm reduction for adult smokers while combating underage use,” Juul CEO K.C. Crosthwaite said in a statement. “We are focused on building a company for the longterm by preparing highquality, scientifically rigorous (FDA) applications to earn authorization in the U.S. while we take a methodical approach to our overseas presence.”

Altria’s deal with Juul is still being reviewed by the antitrust regulators at the Federal Trade Commission. Altria said it expects to receive clearance from the agency by June.