Altria in Talks to Buy Vaping Startup NJOY for at Least $2.75 Billion
Marlboro maker looks to buy rival e-cigarette company after struggles with Juul
Marlboro maker Altria MO -0.51% Group Inc. is in advanced talks to buy e-cigarette startup NJOY Holdings Inc. for at least $2.75 billion, according to people familiar with the matter, moving to take over a new vaping brand after its bet on Juul fizzled.
The deal for NJOY, one of the few e-cigarette makers whose products have clearance from federal regulators, could be announced as soon as this week, the people said, though the talks could still fall apart. The proposed deal includes an additional $500 million earnout if certain regulatory milestones are met, the people said. The Wall Street Journal reported last June that NJOY had hired advisers and was exploring a sale.
Altria, the largest maker of cigarettes in the U.S., has tried for years to develop or acquire e-cigarettes as U.S. smoking of traditional cigarettes declined. The tobacco giant in 2018 paid $12.8 billion for a 35% stake in Juul Labs Inc., only to see the vaping market leader tumble.
Juul, embroiled in a dispute with federal regulators and swamped by lawsuits alleging that it had targeted minors, came close to filing for bankruptcy last year. Juul has since settled much of that litigation but its future remains in question amid a dispute with the Food and Drug Administration over whether its e-cigarettes can remain on the U.S. market. Juul has said it never targeted young people and has been working to regain the trust of regulators and the public.
Altria now values Juul at $714 million—down from the $38 billion valuation when Altria first invested.
The Federal Trade Commission is expected to issue a decision in March on whether to unwind Altria’s investment in Juul. The agency’s staff has alleged that it violated antitrust law. With the Juul case still pending, an NJOY deal would likely face regulatory scrutiny.