Shares of Altria (NYSE: MO) were on an upswing in pre-market trading on Monday as the tobacco major announced the acquisition of NJOY Holdings for around $2.75 billion in cash. This transaction also includes $500 million in cash payments that will depend upon regulatory outcomes regarding certain NJOY products.
This news comes as the company announced on Friday that it had finally exited its minority stake in JUUL Labs. The company has chosen to exchange its minority stake in JUUL for a non-exclusive, “irrevocable global license to certain of JUUL’s heated tobacco intellectual property (agreement).”
Billy Gifford, Altria’s CEO stated, “JUUL faces significant regulatory and legal challenges and uncertainties, many of which could exist for many years. We are continuing to explore all options for how we can best compete in the e-vapor category.”
The carrying and the estimated value of Altria’s investment in JUUL as of December 31, 2022, was $250 million. This value was a 98% drawdown of JUUL’s valuation when Altria first invested in it in December 2018. The company will “record the financial impact of the Agreement in the first quarter of 2023 and intend to treat any such amounts as a special item and exclude it from our adjusted diluted earnings per share.”
Late last month, there was speculation that Altria could be looking to pick up NJOY, a vaping product maker for $2.75 billion.
Analysts are sidelined about MO stock with a Hold consensus rating based on one Buy, four Holds, and one Sell.
