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Altria exchanges minority stake in Juul Labs for heated tobacco rights

March 4, 2023

The Altria office building in New York City. (Mario Tama/Getty Images/File Photo)

US tobacco major Altria Group has announced that it has exchanged its entire minority economic investment in leading e-cigarette maker Juul Labs for a non-exclusive, irrevocable global license to certain of Juul’s heated tobacco intellectual property.

“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.

“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 US Food and Drug Administration last year sought to pull all of Juul Labs’ products off the market, though that decision is on hold while the company challenges it.

Altria in late 2018 invested about $13 billion in Juul, a stake that has been written down several times as Juul has faced various government crackdowns. As of December 31, 2022, the carrying value and estimated fair value of Altria’s Juul investment was $250 million (£207m).

Last year, Altria, the parent company of Philip Morris USA and other brands in tobacco and nicotine, has ended a non-compete agreement with Juul, allowing it to pursue the acquisition of another vaping company, or to develop its own products.

In the heated tobacco sector, the company has the exclusive US commercialisation rights to the IQOS tobacco heating system and Marlboro HeatSticks, but in October last year Philip Morris International and Altria have decided to end the companies’ commercial relationship covering IQOS in the US as of April 30, 2024.

In the same month, Altria has announced a strategic partnership with JT Group, launching a joint venture, Horizon Innovations LLC, with Japan Tobacco International (JTI), a subsidiary of JT which sells the heated tobacco product Ploom, for the US marketing and commercialisation of heated tobacco stick products and its expanded pipeline of wholly owned products.