MO Altria Group Inc

By Robb M. Stewart

Altria Group Inc. has struck a deal to buy startup NJOY Holdings Inc. for at least $2.75 billion, a big step forward for the Marlboro maker's efforts to shift into e-cigarettes as U.S. smoking of traditional cigarettes has declined.

The deal comes after Altria last week said it would exchange its entire minority investment in embattled e-cigarette maker Juul Labs Inc. for a non-exclusive global license to certain of Juul's heated tobacco intellectual property

The tobacco giant said that with NJOY it will gain full global access to the company's e-vapor product portfolio, including the only pod-based cape product with market authorization from the Food and Drug Administration.

The purchase price will be payable in cash when the deal closes and includes an additional $500 million in cash payments contingent on regulatory outcomes with respect to certain NJOY products, Altria said.

The Wall Street Journal reported late last month that Altria was in advanced talks to buy NJOY and to sell its stake in Juul, which came close to filing for bankruptcy last year after becoming embroiled in a dispute with federal regulators and lawsuits alleging it had targeted minors, which Juul has denied.

The majority of vape products on the market haven't received a marketing granted order from the FDA, though so long as the products have a pre-market tobacco product application pending, the regulator has allowed them to remain on the market subject to its enforcement discretion. NJOY has received marketing granted orders for six products, Altria said.

The company said it expects the deal will boost cash flows within two years and strengthen adjusted per-share earnings within three years of closing.

Altria affirmed its forecast for 2023 full-year adjusted earnings of $4.98 to $5.13 a share, up from $4.84 recorded in 2022.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

March 06, 2023 07:58 ET (12:58 GMT)

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