Tobacco company Altria Group is doubling down on its e-cigarette business after a catastrophic bet with Juul lost it billions. The Marlboro maker announced this week it is putting up at least $2.75 billion to buy startup vape maker NJOY Holdings.
Just last week, Altria divested its disastrous stake in Juul, which tumbled from $12.8 billion in 2018 to $250 million at the end of 2022. Altria said it was exchanging the stake for intellectual property rights related to Juul’s heated tobacco products.
“That certainly has dented credibility with investors,” Fitch Ratings senior analyst Bill Densmore said.
Juul has been on a downward spiral as evidenced by Altria’s investment, forced to pay $439 million in a settlement involving marketing to children, along with its FDA battle over a product ban. But Densmore said the switch to NJOY makes sense because, beyond NJOY having regulatory approval, Altria controls its destiny with a 100% ownership versus the minority stake it had in Juul.
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