Altria Exchanges 35% Ownership of Juul for Intellectual Property
The Altria Group has announced that it has given up its entire minority interest in JUUL Labs, exchanging it for a non-exclusive, irrevocable global license to the company’s heated tobacco intellectual property. Altria CEO Billy Gifford released a statement saying that the exchange makes sense because JUUL is facing significant regulatory and legal challenges and uncertainties, while Altria is continuing to explore all options to compete in the e-vapor category.
In a statement released on the evening of March 3, Altria Group announced that it has exchanged its 35% stake in Juul Labs for some of its own heated tobacco intellectual property, officially ending its investment in Juul.
Despite years of developing heated tobacco products, Juul has never launched a heated non-burning product.
In Altria’s 2022 financial report, its valuation of Juul was only $250 million, a 98% decrease from the $12.8 billion it acquired in December 2018.
Altria CEO Billy Gifford stated, “We believe that exchanging our ownership of Juul for intellectual property is the appropriate path forward for our business. Juul faces significant regulatory and legal challenges and uncertainties, many of which could exist for many years.”
In order to enter the e-cigarette market, Altria has been planning to acquire NJOY, the third-largest e-cigarette brand in the United States. Unlike Juul, some of NJOY’s products have already been approved by the FDA for PMTA.
In addition, last year, after terminating its non-compete agreement with Juul, Altria formed a joint venture with Japan Tobacco, focused on heated tobacco products.
Gifford stated that Altria will continue to explore all possible options to choose the best e-cigarette brand.
Juul stated that Altria’s exit gives them complete strategic freedom, allowing them to seek other strategic opportunities and partners.
According to The Wall Street Journal on January 26, Juul is seeking potential sales, strategic investment, licensing, or distribution opportunities and has had preliminary discussions with Philip Morris International, Japan Tobacco, and Altria Group. According to insiders, the negotiations are still in the early stages and may not result in a sale or cooperation agreement.
Altria’s official statement:
Altria Group, Inc. (NYSE:MO) announces that we have exchanged our entire minority economic investment in JUUL Labs, Inc. (JUUL) for a non-exclusive, irrevocable global license to certain of JUUL’s heated tobacco intellectual property (Agreement).
“We believe exchanging our JUUL ownership for intellectual property rights is the appropriate path forward for our business,” said Billy Gifford, Altria’s Chief Executive Officer. “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.”
As of December 31, 2022, the carrying value and estimated fair value of our JUUL investment was $250 million. We 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.