[Sarah Johnson from Irvine California, United States, CC BY 4.0, via Wikimedia Commons]

Major Tobacco Company Abandons $12 Billion Investment, Tries Again To Break Into Vaping

Altria Group, the maker of Marlboro cigarettes, recently announced that it will be shaking up the tobacco industry. The smoking giant has bought e-cigarette startup NJOY Holdings for nearly $2.75 billion in cash as it tries to make a splash in the rapidly-growing vaping market. 

CNBC reports that “the tobacco giant said it would exchange its investment in Juul Labs, which was worth $250 million as of Dec. 31, for certain of the vaping company’s heated tobacco intellectual property.

The NJOY deal will include an additional $500 million in cash payments subject to regulatory outcomes related to certain NJOY products, Altria said.

NJOY is one of the handful of vaping companies whose products have clearance from federal regulators. The company makes NJOY Ace Pods and disposable e-cigarettes under the NJOY Daily brand.

NJOY Ace is currently the only pod-based e-vapor product with market authorizations from the U.S. Food and Drug Administration.”

The move comes as Altria has abandoned its stake in JUUL, the once up-and-coming vaping manufacturer that has cost the company billions of dollars. The Financial Times wrote, “Marlboro maker Altria has swapped its minority stake in Juul Labs for intellectual property rights to some of the e-cigarette company’s heated tobacco prototypes, ending an investment which plummeted in value from $12.8bn just over four years ago following regulatory and legal setbacks.

The Virginia-based cigarette maker said in a statement after market close on Friday that it had exchanged its 35 percent stake in Juul for a ‘non-exclusive, irrevocable global license’ for some of Juul’s heated tobacco intellectual property. Despite years of work developing a heated tobacco device, Juul never launched a heat-not-burn product.

Altria’s decision to exit its investment comes after Juul reached a costly settlement for 5,000 lawsuits alleging that Juul fuelled a teenage ‘vaping epidemic’ and the US Food and Drug Administration banned Juul’s products as part of its sweeping review of 6.7mn e-cigarette products.”

You know the old saying: if at first you don’t succeed in buying an e-cigarette company, try, try again. Altria’s move makes sense, though. The Wall Street Journal explained, “Tobacco companies are jockeying for position to grab pieces of the U.S. e-cigarette market as regulators reshape the industry, deciding which products can stay and which must go. The Biden administration has said it plans to mandate the reduction of nearly all nicotine in cigarettes, adding urgency to cigarette makers’ efforts to find other avenues of growth.

Altria last year formed a partnership with Japan Tobacco Group to develop and sell heated tobacco devices in the U.S. and abroad. Heated tobacco devices contain solid tobacco leaf, and heat the substance to a temperature below the point of combustion so that they don’t emit the harmful compounds present in cigarette smoke.” 

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