Marlboro owner Altria makes £1.4bn bet on cannabis

10 December, 2018, 01:31 | Author: Darnell Patrick
  • For Cronos the Altria tie-up will provide deep regulatory expertise

Michelle Wine Estates and Marlboro, has announced a $1.8 billion investment in Canadian cannabis company Cronos Group.

Altria's stock fell by almost 25 percent this year and revenue is expected to grow by only 1 percent this year and in 2019, CNN Business reported. The deal also includes warrants to acquire additional ownership interest in Cronos at a price of C$19 per share over the next four years, which could raise Altria's stake to 55 per cent.

"Altria brings scale, expertise and complimentary capabilities. that we believe will enable us to expand the scope and enhance the scale of our company", said Mike Gorenstein, chairman, president and chief executive officer of Cronos on a call with analysts Friday.

Marijuana, while still illegal on the federal level in the USA, is allowed in an increasing number of states. Pot producer Canopy Growth Corp's shares in Toronto rose 3.5 per cent to close at $41.75. Federal data from November showed cigarette smoking among US adults reached an estimated 14 per cent in 2017, the lowest level ever.

Cannabis companies are hot right now.

The parent company of Corona beer acquired a $4 billion stake in Canada-based pot producer Canopy Growth last August, upping its ownership of the company to 38 percent from about 10 percent.


Altria will buy 146.2 million of newly issued Cronos shares at C$16.25 per share for a 45-percent stake.

The Canadian subsidiary of Molson Coors (TAP) has a joint venture with The Hydropothecary Corporation to produce cannabis-infused drinks for the Canadian market.

Prior to Friday's announcement, Cronos had confirmed reports that it was in talks with Altria.

— This fall, Canada became the second nation — and by far the largest — to legalize recreational marijuana use and has become the epicenter of large cannabis companies.

"Altria expects its investment to help Cronos Group accelerate its growth strategies and its R&D; and intellectual property development", according to the statement. Altria will make Cronos its exclusive partner for all world-wide cannabis-related investments, with some limited exceptions.

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