Altria’s Juul stake goes up in smoke: from $12.8 billion to $450 million

(Reuters) -Marlboro maker Altria Group Inc on Thursday additional slashed the worth of its stake in Juul Labs Inc to simply $450 million, blaming a lower within the probabilities of the U.S. well being regulator approving Juul’s e-cigarettes.

The worth of Altria’s 35% stake had slipped to $1.6 billion on the finish of March from $12.8 billion in 2018 amid intense regulatory scrutiny and elevated dangers of an entire ban in america.

Altria stated there may be increased chance of Juul in search of chapter safety as its money reserves dry up.

Juul’s e-cigarettes had been briefly banned in america final month after the Meals and Drug Administration concluded that it failed to indicate the sale of its merchandise shall be applicable for public well being.

However following an enchantment by the corporate, the well being regulator put the ban on maintain and agreed to a further evaluate of Juul’s advertising software.

Juul has maintained that its merchandise meet the statutory customary of being applicable for the safety of public well being.

Altria’s stake in Juul is now price simply 3.5% of the unique worth, giving the tobacco large the choice to be launched from it non-compete clause and make investments or have interaction within the e-vapor enterprise aside from Juul.

Nevertheless, Altria stated it had opted to not be launched from these obligations for now, because it nonetheless sees worth in its funding rights, together with substantial voting energy, in Juul.

Altria additionally stated excessive inflation and fuel costs in addition to rising rates of interest had been denting cigarette demand in america, contributing to a 5.7% drop in its second-quarter income to $6.54 billion.

(Reporting by Uday Sampath in Bengaluru; Modifying by Vinay Dwivedi and Arun Koyyur)