Altria will try e-cigarettes for the fourth time in its Blockbuster Acquisition of NJOY


For tobacco giant Altria Group, it’s back to the future as it makes its fourth attempt to gain a lasting share of the e-cigarette market with its planned acquisition of the NJOY product portfolio, foreign news reports today.

Altria said it would pay a whopping $2.75 billion for NJOY Holdings Inc and could pay another $500 million.

“We applaud management for wanting to participate in the $7 billion e-cigarette category, although we question multiple payouts, which we think is rich for such a small brand,” TD Cowen analysts noted.

In light of the NJOY deal and Altria’s partnership with JUUL Labs Inc. With a dismal history, Altria is poised to invest more than $7 billion to more than double that in order to gain a foothold in the e-cigarette space.

In 2018, Altria took a 35% stake in Juul for $12.8 billion. But Altria recently wrote down the value of its investment to $250 million, taking into account the cost of litigation accusing Juul of targeting young people with its vaping devices and the impact of litigation on Juul’s market share.

Last week, Altria traded its right to buy Juul for the intellectual property rights to some of Juul’s heated tobacco prototypes.

NJOY has an advantage with e-cigarettes because it has received six of the 23 Premarket tobacco product applications (PMtas) issued by the U.S. Food and Drug Administration to date.

Pmtas apply to e-cigarette products that were already on the market before the FDA received regulatory authorization in 2016.

The goal of requiring PMtas is to ensure that devices such as e-cigarettes or e-cigarettes are a safer alternative to cigarettes but do not expose a new generation to the possibility of becoming dependent on nicotine.

In addition to its Juul investment, Altria also acquired e-cigarette marketer Green Smoke Inc. and launched its own brand, MarkTen — both of which failed to close Juul investments.

As part of the NJOY deal, Altria could pay an additional $500 million, depending on FDA approval of two NJOY Ace menthol capsules and two additional Ace variants.

British American Tobacco’s VUSE was the leading e-cigarette brand in the two weeks to 11 February, with 41.4 per cent of the US dollar share tracked by NielsenIQ.

Read Also: Why Altria is buying NJOY: Two e-cigarettes already Approved by FDA

In second place was Juul at 26.5 percent, followed by NJOY at 2.7 percent, down from 8.2 percent in October 2019.


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