Altria Provides Update on FTC Review of JUUL Investment
April 08 2019 - 4:30PM
Business Wire
Altria Group, Inc. (Altria) (NYSE: MO) today announces it has
received a request for additional information (Second Request) from
the U.S. Federal Trade Commission (FTC) relating to its investment
in JUUL Labs, Inc. (JUUL) that closed in December 2018.
Altria currently holds an approximate 35% non-voting, economic
interest in JUUL. Altria is now seeking to convert its JUUL
interest to voting securities pursuant to the terms of its
investment. Following conversion, Altria expects to account for its
investment in JUUL under the equity method of accounting and will
have the right to designate one-third of the members of JUUL’s
board of directors. JUUL will remain fully independent.
Pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (HSR Act), Altria and JUUL filed notification of
the proposed conversion with the federal antitrust authorities and
must observe a waiting period before completing the conversion. As
part of the HSR Act review process, the FTC issued the Second
Request on April 8, 2019 to extend the waiting period while the FTC
conducts its review. The waiting period is extended until 30 days
after the parties have substantially complied with the Second
Request, though it is common for that period to be extended
voluntarily by the parties or terminated sooner by the FTC.
Issuance of a Second Request is a normal part of the FTC’s
investigation process. Altria is cooperating with the FTC’s
investigation and will work to provide answers to the FTC’s
outstanding questions promptly.
Altria continues to believe that its investment and the services
Altria has agreed to provide JUUL will promote competition and have
long-term benefits for adult smokers. Altria continues to
anticipate that the conversion of its JUUL shares will occur as
planned.
Altria's Profile
Altria’s wholly-owned subsidiaries include Philip Morris USA
Inc. (PM USA), U.S. Smokeless Tobacco Company LLC (USSTC), John
Middleton Co. (Middleton), Sherman Group Holdings, LLC and its
subsidiaries (Nat Sherman), Ste. Michelle Wine Estates Ltd. (Ste.
Michelle) and Philip Morris Capital Corporation (PMCC). Altria
holds equity investments in Anheuser-Busch InBev SA/NV (AB InBev),
JUUL Labs, Inc. (JUUL) and Cronos Group Inc. (Cronos Group).
The brand portfolios of Altria’s tobacco operating companies
include Marlboro®, Black & Mild®,
Copenhagen® and Skoal®. Ste. Michelle produces and
markets premium wines sold under various labels, including Chateau
Ste. Michelle®, Columbia Crest®, 14 Hands® and
Stag’s Leap Wine Cellars™, and it imports and markets
Antinori®, Champagne Nicolas Feuillatte™,
Torres® and Villa Maria Estate™ products in the
United States. Trademarks and service marks related to Altria
referenced in this release are the property of Altria or its
subsidiaries or are used with permission. More information about
Altria is available at altria.com and on the Altria Investor
app.
Forward-Looking and Cautionary Statements
This release contains projections of future results and other
forward-looking statements that involve a number of risks and
uncertainties and are made pursuant to the Safe Harbor Provisions
of the Private Securities Litigation Reform Act of 1995.
Important factors that may cause actual results and outcomes to
differ materially from those contained in such forward-looking
statements include, without limitation, the possibility that
regulatory approvals required for the conversion of the shares into
voting shares may not be obtained in a timely manner, if at all;
and that such approvals may be subject to unanticipated conditions.
Other important factors include the possibility that the expected
benefits of the transaction may not materialize in the expected
manner or timeframe, if at all; the potential inaccuracy of the
financial projections (including, without limitation, projections
relating to JUUL’s domestic growth and international expansion);
prevailing economic, market, regulatory or business conditions, or
changes in such conditions, negatively affecting the parties; the
risk of a downgrade in Altria’s credit ratings; risks that the
transaction disrupts JUUL’s current plans and operations; the fact
that Altria’s reported earnings, financial position and use of
equity accounting and any future dividends paid by JUUL on shares
owned by Altria may be adversely affected by tax and various other
factors, such as the risks encountered (including, without
limitation, regulatory and litigation risks) and decisions made by
JUUL in its business; risks related to the investment disrupting
Altria, JUUL or their respective management; and risks relating to
the effect of the transaction on JUUL’s ability to retain and hire
key personnel or on its relationships with customers, suppliers and
other third parties. These factors and other important factors that
may cause actual results and outcomes to differ materially from
those contained in projections and forward looking statements are
described in Altria’s publicly filed reports, including its Annual
Report on Form 10-K for the year ended December 31, 2018.
Altria cautions that the foregoing list of important factors is
not complete and does not undertake to update any forward-looking
statements that it may make except as required by applicable law.
All subsequent written and oral forward-looking statements
attributable to Altria or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
referenced above.
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