Marlboro Boss Invests Billions In Marajuana Company After Canada Legalised The Drug

By Harry Brumpton and Uday Sampath Kumar

Marlboro cigarette maker Altria Group Inc made a big bet on the rapidly growing marijuana industry on Friday with a $2.4 billion investment in Canadian cannabis producer Cronos Group Inc. The move will help it tap into a customer base outside cigarette smokers, as cigarette smoking declines in the U.S.

Altria also will receive warrants, which, if exercised, would increase its ownership to 55% and provide an additional CA$1.4 billion in proceeds for the integrated marijuana company.

"Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria", said Howard Willard, Altria's Chairman and Chief Executive Officer.

Altria has agreed to pay $16.25 per share to acquire 146.2 million shares of Cronos, which represents a 41.5 premium above the stock before it confirmed the companies' preliminary discussions.

As part of the agreement, Altria will be able to nominate four members to Cronos Group's board of directors.

"As a company that operates predominantly in the highly-regulated tobacco industry, we believe Altria has valuable regulatory and compliance experience that could end up being a key competitive advantage for Cronos, as it competes with other licensed producers for what seems to be a growing set of worldwide opportunities", Canaccord Genuity analysts wrote in a research note. The transaction is expected to close in the first half of 2019.

New Australian Law Poses Risk to Encrypted Services
Australian Prime Minister Scott Morrison leaves the House of Representatives after debate on amendments to the encryption laws. Australia's decision is the most serious attempt by any national parliament so far to rein in tech companies involuntarily.

New Captain Marvel Trailer Clears Up That Whole Old-Lady-Punching Thing
Or would you rather Marvel and Sony had kept you in the dark about Spider-Man's final fate? But I doubt Sony will go down that route if the trailer finally is shown.

Tyler Perry plays 'Secret Santa,' pays off $434000 in Walmart layaways
For those who don't know, a layaway lets a customer reserve a product at a store and pay for it over time. News that Perry donated $432,635 to the stores.

"We believe cannabis is an excellent strategic fit for tobacco", Jefferies analyst Owen Bennett said in a research note earlier this week.

The Cronos investment follows other deals in this space.

Canadian marijuana company Canopy Growth (CGC) already has received a multibillion dollar investment from Corona owner Constellation Brands (STZ).

Gorenstein said that Altria has "decades of experience in regulatory, government affairs, compliance, product development and brand management that we expect to leverage, particularly as new markets for cannabis open around the world". Altria is paying 25 times forward sales, she said, and in her view, Altria is "buying their way out of a bind" after nearly two decades of volume decline for USA cigarettes, and a challenging 2018 for e-cigarettes.

This will bring the megabucks investment up to the same level as the CAN $4bn (US $3bn / £2.3bn) which Constellation Brands spent earlier this year when they bought out Canopy Growth Corp., a cannabis producer also based in Canada. In 2014, Altria acquired e-cigarette startup GreenSmoke Inc for $110 million.

Altria is also in talks to take a minority stake of between 20 per cent and 40 per cent in e-cigarette maker Juul Labs Inc, sources told Reuters last month.

Related:

Comments

Latest news

Raptors waive G-League guard Kay Felder after allegation of domestic violence
Monday's arrest may cost Felder any hope of returning to the National Basketball Association . Our sources say the alleged victim was able to call a family member who then called police.

Splashdown! SpaceX Rocket Topples into Water Following Technical Glitch
SpaceX and Boeing have signed a contract with NASA to send U.S. astronauts to the International Space Station . The Dragon space capsule that flew on Wednesday was used once before, on a supply mission in February 2017.

James Corden re-enacts 'Thank U, Next' - and Ariana Grande approves
Later: "I'm so frickin' grateful for his pecks". "I thought it was very sweet", Goldblum replies. "It's for a friend. promise". In the spoof, Corden rocks silky pajamas, and looks at a " Thank U, Jeff " book, imitating Grande in the music video.

Derek Fisher joining LA Sparks as head coach
National Basketball Association champion and former NY Knicks head coach Derek Fisher is back in the coaching ranks. When Jackson was hired by the Knicks, the former Lakers and Bulls coach called upon Fisher to be his head coach.

Grace Millane: Disappearance of British backpacker being investigated as murder
Grace was last seen wearing a black dress with white sneakers on Queen Street, in Auckland's CBD, at around 9.41pm last Saturday . He was brought back here to Auckland Central Police Station and is now speaking to us in relation to the murder of Grace Millane.

‘Kedarnath’ screening banned across Uttarakhand, says state tourism minister
The ban has been imposed by the district magistrates of Uttarakhand in order to protect the law and order of the state. Those seeking a ban on the film accused it of hurting Hindu sentiments and alleged that it was promoting love jihad .

NHL Teams Suffering "Vegas Hangover" After Playing Golden Knights at the Fortress
The Golden Knights announced the move today, making roster space by assigning forward Daniel Carr to the AHL. The Knights are not the same team as then due to their confidence with the recent five-game winning streak.

Stevenson still critical, too early for long-term prognosis: doctors
He was, in fact, on course to winning his fight against Gvozdyk until the third round but lost momentum there on in. Adonis Stevenson was knocked out by Oleksandr Gvozdyk in their light heavyweight WBC championship boxing fight.

Crash Team Racing: Nitro Fueled Confirmed at The Game Awards
Take a look at the official trailer above and tell us in the comments if you're excited to head out onto the track with Crash . Crash Team Racing Nitro Fueled is a Crash Team Racing (PS1) remake complete with all of the original characters and courses.

Fallout 76 server Maintenance schedule confirmed as Bethesda take servers down
Users around the net have chimed in to corroborate this claim, with one person on Twitter uploading a screencap of the incident. After the latest patch was announced on Wednesday, things seemed to be trending in the right direction.

Trump sending Air Force One to carry late President George H.W
After departing the Capitol, Bush's remains will be taken to Washington National Cathedral for a funeral. Former Secretary of State James Baker said the passing of his friend, former President George H.W.

Ex-Fox News anchor to be new U.S. ambassador to the UN
The first ambassador to the U.N.to serve in a presidential Cabinet was actually Henry Cabot Lodge Jr ., under Eisenhower. Heather plays a key role in advancing US foreign policy & I look forward to her speedy confirmation".

Doctors blame tap water in neti pot for brain-eating amoeba
But when Cobbs operated to remove the mass, "it was just dead brain tissue", making it hard to determine what it actually was. For a month, she tried to get rid of it using a neti pot with tap water instead of using sterile water, as is recommended.

Milwaukee Bucks Trade Matthew Dellavedova to Cavaliers for George Hill
Dellavedova got his start in Cleveland , where he played for three seasons and helped the Cavaliers win the 2016 NBA Finals. The Cavs remain active in trade talks and according to Fedor , are "willing to take on extra salary" for more draft picks.

Real Madrid reportedly agree deal to sign Chelsea star Eden Hazard
Maurizio Sarri has been keen to tie his star player down to a new long-term contract, but admits the decision rests with Hazard . The future is bright for him'. "Should Chelsea's season peter out, it could be the last we see of Hazard in the Premier League ".

Other news