Altria Group Inc. has made two big announcements. The company has exchanged its entire minority economic investment in JUUL Labs and has agreed to acquire NJOY Holdings.
Altria exchanged its minority stake in JUUL for a non-exclusive, irrevocable global license to certain of JUUL’s heated tobacco intellectual property.
“We believe exchanging our JUUL ownership for intellectual property rights is the appropriate path forward for our business,” said Billy Gifford, Altria’s CEO. “JUUL faces significant regulatory and legal challenges and uncertainties, many of which could exist for many years. We are continuing to explore all options for how we can best compete in the e-vapor category.”
As of Dec. 31, 2022, the carrying value and estimated fair value of Altria’s JUUL investment was $250 million. The company will record the financial impact of the agreement in the first quarter of 2023 and intend to treat any such amounts as a special item and exclude it from its adjusted diluted earnings per share.
Along with the exchange, Altria has also announced its agreement to acquire NJOY Holdings for approximately $2.75 billion in cash payable at closing. The transaction terms include an additional $500 million in cash payments that are contingent upon regulatory outcomes with respect to certain NJOY products.
Altria will gain full global ownership of NJOY’s e-vapor product portfolio, including NJOY ACE, currently the only pod-based e-vapor product with market authorizations from the U.S. Food and Drug Administration (FDA).
“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,” said Gifford. “We believe the strengths of our commercial resources can benefit adult tobacco consumers and expand competition. We are also excited to welcome NJOY’s talented employees to Altria at closing.”
As a result of this transaction, Altria’s enhanced smoke-free portfolio will include full global ownership of products and technologies across the three largest smoke-free categories and a joint venture with J.T. Group for the U.S. commercialization of heated tobacco stick products.
“We are excited to add NJOY’s e-vapor intellectual property as a new platform that we believe we can build on to help more adult smokers transition to smoke-free alternatives,” said Olivier Houpert, Altria’s new chief innovation and product officer.
Altria’s wholly owned subsidiaries include manufacturers of both combustible and smoke-free products. In combustibles, Altria owns Philip Morris USA Inc. and John Middleton Co. Its smoke-free portfolio includes ownership of U.S. Smokeless Tobacco Co. LLC (USSTC) and Helix Innovations LLC.
