Altria, America’s preeminent cigarette company, is looking beyond tobacco for growth.
Fresh off a $1.8 billion investment in Canadian cannabis company Cronos Group (CRON), Altria on Thursday purchased a 35% stake in e-cigarette maker Juul, worth $12.8 billion. The Wall Street Journal was the first to report that Altria (MO) was considering an investment.
The investment is the largest in Altria’s history, and it values Juul at $38 billion dollars. It pairs a company that controls half of the American tobacco market with startup Juul — which sells more than 70% of the cartridge-based e-cigarettes in the United States.
The marriage allows Altria to broaden its customer base. Altria is a US-only business, spinning off from Philip Morris International in 2008. Juul sells its e-cigarettes in Canada, Israel, Russia and the United Kingdom, in addition to the United States.
It could give Altria, a leader in a US cigarette business in slow decline, a window into the rapidly growing market of e-cigarettes. The deal could give Juul access to Altria’s massive distribution network and top-shelf space at stores. And Altria will advertise Juul products in cigarette pack inserts and mailings, the company announced.