The Oklahoman

Altria invests $2.75B in rival startup NJOY

Move comes shortly after it dropped Juul stake

- Michelle Chapman

Days after exiting its stake in troubled electronic cigarette maker Juul, Altria announced a $2.75 billion investment in rival electronic cigarette startup NJOY.

The Marlboro maker gets full ownership of NJOY’s e-vapor product portfolio, the Virginia company said Monday, including its pod-based e-vapor product ACE.

“We believe we can responsibl­y accelerate U.S. adult smoker and competitiv­e adult vaper adoption of NJOY ACE in ways that NJOY could not as a standalone company,” Altria CEO Billy Gifford said.

The agreement includes an additional $500 million in cash payments contingent upon regulatory approval of some products by NJOY Holdings Inc., based in Scottsdale, Arizona.

Altria’s announceme­nt comes just days after the company said it was swapping its minority stake in Juul Labs for a license to some of Juul’s heated tobacco intellectu­al property.

Altria said that the carrying value and estimated fair value of its Juul investment was $250 million at the end of last year. The company will record the financial impact of the agreement in the first quarter of 2023 and plans to treat any amounts as a special item and exclude it from adjusted diluted earnings per share.

Juul said Friday when Altria exited its stake that it now has “full strategic freedom” to pursue other partnershi­ps.

Gifford said the swap was the right decision for Altria.

“Juul faces significant regulatory and legal challenges and uncertaint­ies, many of which could exist for many years,” Gifford said.

In December Juul reached settlement­s covering thousands of lawsuits over its e-cigarettes.

The company faced more than 8,000 lawsuits brought by individual­s and families of Juul users, school districts, city government­s and Native American tribes. The settlement resolved most of those cases, which had been consolidat­ed in a California federal court pending several bellwether trials.

Financial terms of the settlement were not disclosed.

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