Altria-Juul Deal Brings Holiday Surprise to Employees
The vaping world is filled with news big and small — let’s be honest, mostly big — and this one that’s been unfolding over the past couple of months is no different. However, it’s bigger than most.
We head back to the end of October, when USA Today reported that Altria, maker of Marlboro and parent company of Philip Morris USA stopped selling various vaping-related products under its offerings. This included MarkTen Elite pod-based products, Apex by MarkTen pod-based products, and all favored variants of MarkTen and Green Smoke cigalike products except tobacco, menthol and mint varieties. Altria told USA Today these sales would be halted “until federal regulators sign off on those or ‘the youth issue is otherwise addressed.’” With the FDA threatening to ban various flavored e-liquids, but with it not happening as of yet, this again raised the issue of curbing youth vaping versus hampering adult smokers trying to quit using flavors.
Then we shift to December, when USA Today again reported that Altria, having discontinued MarkTen and Green Smoke e-cigarettes, was “considering a significant minority stake in Juul. At the time, Altria told the news organization that it will “refocus its resources on more compelling reduced-risk tobacco product opportunities.” CEO Howard Willard went further in a statement, saying: "We remain committed to being the leader in providing adult smokers innovative alternative products that reduce risk, including e-vapor. "We do not see a path to leadership with these particular products and believe that now is the time to refocus our resources."
Juul no doubt has topped the market and would give Altria the volume growth in the e-cigarette market it’s been looking for. And finally, right before Christmas — the big news came. Altria takes a 35 percent stake in Juul ($12.8 billion), valuing Juul at $38 billion. The all-cash deal was announced Dec. 20, with Willard again releasing a statement which in part read: "We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes by investing $12.8 billion in Juul, a world leader in switching adult smokers. We have long said that providing adult smokers with superior, satisfying products with the potential to reduce harm is the best way to achieve tobacco harm reduction." The deal, reports CNBC, ended 14 months of negotiations between the companies, and marks “a turning point” for Juul.
Altria has agreed to give Juul pods top-shelf space alongside Marlboro and will also help Juul with its distribution and logistics surrounding about 230,000 retail locations. Additionally, Altria cannot acquire more than a 35 percent stake or sell off Juul shares within six years from closing. Juul remains an independent company under the deal, however Altria can appoint directors representing one-third of Juul’s total board.
In the true holiday spirit, Altria agreed to pay a $2 billion bonus to Juul, which the company reports planning to share with its 1,500 employees, averaging about $1.3 million each. CNBC reports that the bonus “is being paid out as a special dividend as part of the deal. How much employees get depends on a number of factors, including how long they've been with the company and how much stock they own.”