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Altria Makes $12.8 Billion Minority Investment in Juul

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Richmond, Virginia-based Altria Group Inc. has signed and closed a $12.8 billion investment in JUUL Labs Inc., the U.S. leader in e-vapor. The service agreements will accelerate JUUL’s mission to switch adult smokers to e-vapor products. Altria’s investment represents a 35 percent economic interest in JUUL, valuing the company at $38 billion. JUUL will remain fully independent.

“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,” said Howard Willard, Altria’s chairman and CEO. “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. Through JUUL, we are making the biggest investment in our history toward that goal. We strongly believe that working with JUUL to accelerate its mission will have long-term benefits for adult smokers and our shareholders.”

“Altria’s investment sends a very clear message that JUUL’s technology has given us a truly historic opportunity to improve the lives of the world’s one billion adult cigarette smokers,” said Kevin Burns, CEO of JUUL. “This investment and the service agreements will accelerate our mission to increase the number of adult smokers who switch from combustible cigarettes to JUUL devices.”

JUUL will remain fully independent and will have access to Altria’s best-in-class infrastructure and services. As part of the service agreements:

  • Altria will provide JUUL access to its tobacco products retail shelf space, allowing JUUL’s tobacco and menthol-based products to appear alongside combustible cigarettes. JUUL’s flavored products will continue to only be available on
  • Altria will enable JUUL to reach adult smokers with direct communications through cigarette pack inserts and mailings to adult smokers via Altria companies’ databases.
  • Altria will apply its logistics and distribution experience to help JUUL expand its reach and efficiency and JUUL will have the option to be supported by Altria’s sales organization, which covers approximately 230,000 retail locations.

Fueled by its Silicon Valley approach to product development and founded by former smokers, JUUL has built an industry-leading position by satisfying adult tobacco consumers with its differentiated e-vapor products.

JUUL represents approximately 30 percent of the total U.S. e-vapor category. JUUL has a deep innovation pipeline and currently operates in eight countries, with rapid international expansion plans.

“This is a unique and compelling opportunity to invest in an extraordinary company, the fastest growing in the U.S. e-vapor category. We are excited to support JUUL’s highly-talented team and offer our best-in-class services to build on their tremendous success,” Willard said.

In 2000, Altria became the first and only company in the industry to support FDA regulation of tobacco products.​ Today, the FDA has regulatory authority over all tobacco products, and the FDA distinguishes between the harm associated with combustible versus non-combustible products.​ Altria will participate in the e-vapor category only through JUUL. The investment complements Altria’s non-combustible offerings in smokeless and heat-not-burn, upon FDA authorization of IQOS.

Commitment to underage tobacco prevention

Altria and JUUL are committed to preventing youth from using any tobacco products. As recent studies have made clear, youth vaping is a serious problem, which both Altria and JUUL are committed to solve. As JUUL officials previously stated, “Our intent was never to have youth use JUUL products. But intent is not enough, the numbers are what matter and the numbers tell us underage use of e-cigarette products is a problem.”

As a result, JUUL recently began implementing a number of actions to prevent underage vaping, including stopping the sales of flavored products to retail stores, enhancing age-verification for its online sales, eliminating social media accounts and developing further technology solutions.

JUUL believes that it cannot fulfill its mission to provide the world’s one billion adult smokers with a true alternative to combustible cigarettes if youth use continues unabated. Together, JUUL and Altria will work to prevent youth usage through their announced initiatives, further technological developments and increased advocacy for raising the minimum age of purchase for all tobacco products to 21.

Positioning Altria for long-term growth

Building on Altria’s previously announced growth investment in Cronos Group Inc., Altria believes its investment in JUUL strengthens its financial profile and enhances future growth prospects.

Altria continues to position its business to return value for shareholders over the long-term through earnings growth and dividends. Altria expects its growth to be driven by maximizing income from its wholly-owned operating companies and increasing contributions from its equity and strategic investments. Altria’s service companies will contribute their capabilities to enhance value creation in both its wholly-owned subsidiaries and, when appropriate, its investments.

Cost Reduction Program

Altria also announced a cost reduction program designed to deliver approximately $500 million to $600 million in annualized cost savings by the end of 2019. This program will include, among other things, reducing third-party spending across the business and workforce reductions. Altria expects this program to offset most of the interest expense associated with the debt incurred to finance the JUUL and Cronos Group investments.

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