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Altria Group Inc., an American tobacco company that is one of the largest producers of cigarettes and related products in the world, is buying NJOY e-cigarette and vaping startup for almost $2.8 billion.
Altria also holds the rights to the Marlboro cigarette brand in the United States, and on Monday this week, it announced its agreement to acquire NJOY. This comes after the company lost billions when it invested in another e-cigarette company, Juul.
As per Reuters, a number of major tobacco companies have recently been investing heavily in cigarette alternatives as the smoking rates around the world continue to fall. Although the e-cigarette and vaping are also facing tough regulatory scrutiny as many minors are getting into the habit of “smoking,” Altria is still pushing through with the cigarette alternative business.
It was reported that Altria is betting that NJOY will provide it with an easier way to push into the market since six of its products have already received full approval from the U.S. Food and Drug Administration (USFDA).
On the other hand, Juul is still in the middle of seeking the same approval for its e-cigarette line. It is having difficulties with the process after it was criticized for its threat to health and use by minors.
To fund the deal with NJOY, Altria will use cash from a $2.7 billion agreement it had with Philip Morris International last year for its IQOS heated tobacco line. It was said that the contract with NJOY would include an additional $500 million in cash payments as per the regulatory approvals of its other products.
“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,” Altria’s chief executive officer, Billy Gifford, said in a press release. “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.”
Photo by: Brendan Stephens/Unsplash
