So it finally happened, JUUL has sold a considerable amount of the company to Big Tobacco. Today, Altria ponied up a cool $12.8 Billion in straight cash to purchase 35% of the company, raising the valuation of JUUL to $38 billion. This is no small acquisition either. This will fundamentally change how the FDA will approach, not just JUUL, but vaping in general.
“We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes by investing $12.8 billion in Juul, a world leader in switching adult smokers” – Howard Willard CEO Altria
Obviously, Big Tobacco has been doing all it can to both stamp out vaping and enter the market. We’ve seen quite a shift happen when revenues were posted by JUUL, proving to Big Tobacco there is much more interest in vaping than traditional cigarettes. This started to raise the valuation of JUUL, only being slightly hindered during the year by the negative attitude and policies the FDA had against it. But that didn’t stop Altria nor JUUL. This further proves that these companies do not feel threatened by any action the FDA may take. The amount of money behind JUUL now, to fight the advances of the FDA, has just exponentially increased. This is all on the heels of Altria acquiring 45% stake in Canadian Cannabis company Cronos. So if you’ve been looking to invest in Sin stocks, Altria is a bet worth taking. All in all, it will be interesting to see how both companies prepare for the future. Especially considering how JUUL was in talks with the FDA about removing flavors all together, which would completely demolish the rest of the “small” vaping industry.