Four New Directors Join Cronos Group Board
Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) (“Cronos Group” or the
“Company”) today announced that the C$2.4 billion equity investment
in the Company by Altria Group, Inc. (NYSE: MO)
(“Altria”) has closed. As previously announced, Altria’s investment
represents an approximate 45% ownership interest in Cronos Group.
Altria also has a warrant to acquire additional ownership in Cronos
Group, which is exercisable over the next four years. If exercised
in full today, the warrant would increase Altria’s ownership in
Cronos Group to approximately 55% and provide Cronos Group with
additional proceeds of approximately C$1.4 billion.
“We are delighted to close this transaction and kick-off a
relationship that we expect to lead to significant growth and value
creation,” said Mike Gorenstein, Cronos Group’s Chairman, President
and Chief Executive Officer. “Altria’s investment and the services
they will provide to Cronos Group will enhance our financial
resources, and allow us to expand our product development and
commercialization capabilities, and regulatory expertise to better
position Cronos Group to compete, scale and lead the rapidly
growing global cannabis industry. We look forward to the many
opportunities we expect this relationship to create.”
“We’re excited to finalize our investment in Cronos Group and to
support their talented team,” said Howard Willard, Altria’s
Chairman and Chief Executive Officer. “Cronos Group is our
exclusive partner in the emerging global cannabis category and
represents an exciting new growth opportunity for Altria.”
Director Additions
In connection with the closing, the board of directors of Cronos
Group (the “Cronos Group Board”) has been expanded from five to
seven members. The Cronos Group Board will include existing
directors, Mike Gorenstein, Jim Rudyk, Chief Financial Officer of
Roots Corporation, who will serve as lead director, and Jason
Adler, Founder and Managing Partner of Gotham Green Partners GP, as
well as four new directors nominated by Altria:
- Kevin “K.C.” Crosthwaite, Jr., Senior Vice President, Chief
Strategy and Growth Officer of Altria;
- Bronwen Evans, Independent Consultant and Brand
Strategist;
- Murray Garnick, Executive Vice President and General Counsel of
Altria; and
- Bruce Gates, Founding Partner of Three Oaks Strategies LLC
The Cronos Group Board will continue to have two committees. The
Audit Committee will include Mr. Adler, Ms. Evans, and Mr. Rudyk
who will serve as Chair of the Audit Committee. The Compensation
Committee will include Mr. Adler, Mr. Rudyk, and Mr. Crosthwaite
Jr. who will serve as Chair of Compensation Committee.
“We are pleased to welcome these new directors to the Cronos
Group Board and look forward to benefitting from their experience
and expertise as we continue our strategic growth and international
development,” said Mike Gorenstein. “We also extend our gratitude
to Alan Friedman and Michael Coates, who will be retiring from the
Cronos Group Board. We appreciate their service to the
Company.”
Mr. Coates will continue to serve as a Canadian regulatory
advisor to Cronos Group’s Board of Directors.
New Chief Financial Officer and Chief
Commercial Officer
Cronos Group also announced today that Jerry Barbato, most
recently Senior Director of Corporate Strategy at Altria, has
joined Cronos Group and has been appointed Chief Financial Officer
of the Company, effective April 15, 2019. Mr. Barbato assumes the
CFO role from William Hilson, who will serve as Cronos Group’s
Chief Commercial Officer, a newly created role, effective April 15,
2019. As Chief Commercial Officer, Mr. Hilson will report to Mr.
Gorenstein and be responsible for further enhancing the commercial
strategy as well as the product and research development priorities
of the Company.
“These appointments demonstrate our commitment to a premier
leadership team with the skills and experience necessary to support
our next phase of growth and development,” said Mike Gorenstein.
“In addition to benefiting from Jerry’s finance expertise, we
expect his first-hand knowledge of Altria to help ensure we fully
capitalize on our partnership with them. William is a valuable
contributor to our team, and we expect his scientific and
pharmaceutical knowledge to further enhance the commercial strategy
and R&D initiatives for the Company. I am excited to work with
Jerry and William as we continue building a leading, innovative
global cannabinoid company.”
Mr. Barbato joins Cronos Group with 20 years of experience in
strategic planning, corporate financial analysis and services, and
brand management. Prior to joining Cronos Group, he held various
roles within the Altria family of companies. Mr. Barbato
joined Altria in 2003 and served in leadership roles within the
Finance, Strategy & Business Development and Marketing
functions, and most recently held the role of Senior Director of
Corporate Strategy. He has broad experience in both finance and
operating roles, as well as managing operations in regulated
international markets. Mr. Barbato supported the Marlboro brand and
provided analysis that shaped brand strategies for Altria’s
smokeable segment. He also served as Assistant General Manager for
a joint venture, Richmark GmbH, in Zurich, Switzerland. Mr. Barbato
holds a BS in Accounting from Marquette University and an MBA from
the University of Maryland, University College.
Prior to joining Cronos Group in 2016, Mr. Hilson spent more
than 15 years with multinational pharmaceutical companies as the
President of Hillhurst Management Inc. and CFO of EMD Inc. and
Serono Canada Inc., and Director of Finance for Hemosol Inc. Mr.
Hilson’s specialty is in pharmaceuticals with a proven track record
of driving business objectives and growth, increasing efficiencies,
overseeing clinical programs and product launch activities and
increasing profit. Mr. Hilson graduated from the University of
Western Ontario with an Honors BS in Genetics, and from the
University of Toronto with a Master of Science Clinical
Biochemistry. His academic work has been published internationally.
Mr. Hilson was a member of the Board of Directors of EMD Inc.,
Canada and EMD Crop Bioscience and he is a member of Chartered
Professional Accountants of Canada.
About Cronos Group’s New Directors
- Kevin “K.C.” Crosthwaite, Jr. serves as Senior Vice President,
Chief Strategy and Growth Officer at Altria. In this role, Mr.
Crosthwaite identifies and pursues Altria’s strategic and
innovative product growth priorities. Since joining Philip Morris
USA in 1997, Mr. Crosthwaite has held several leadership positions
across Altria’s family of companies, including President and Chief
Executive Officer for Philip Morris USA, where he oversaw
operations for Philip Morris USA and John Middleton, as well Vice
President, Strategy and Business Development, and Vice President
& General Manager at Marlboro. Mr. Crosthwaite also led Altria
Ventures’ international efforts with innovative tobacco products.
Mr. Crosthwaite currently serves on the Board of Directors for
United Negro College Fund and the Richmond Forum. Mr. Crosthwaite
received his BA from Marquette University and his MBA from
Providence College.
- Bronwen Evans is an independent consultant drawing on 20 years
of experience in the charitable, corporate and government sectors
to provide clients with business development and brand strategies
for transformational growth. Ms. Evans was a Founding Director of
the True Patriot Love Foundation, where she served as its first CEO
from 2012 to 2019 and raised record funds to support 25,000
Canadian military and veteran families. Before that, Ms. Evans was
the Vice President of Marketing and Corporate Affairs at Medcan
Health Management, and became the company’s first Chief Privacy
Officer. She is a recipient of The Queen’s Diamond Jubilee Medal
(2012) and currently serves as Director, Secretary and Chair of the
Governance Committee of Kingsway College School. Ms. Evans holds a
BA in Philosophy (with Honors) from McGill University, and a Master
of Arts in Philosophy with a concentration in Biomedical Ethics
from Carleton University.
- Bruce Gates is a Founding Partner of Three Oaks Strategies LLC,
a management, policy and communications consulting firm based in
Alexandria, Virginia. He is also the Founding Partner of Three Oaks
Asset Management LLC, a family office/venture capital firm. Prior
to his retirement from Altria in November 2017, Mr. Gates served as
a Senior Vice President of External Affairs for Altria Client
Services. In his role, he led the Government Affairs and Corporate
Affairs departments and directed the company’s strategies involving
governments, corporate communications, philanthropic programs and
corporate social responsibility. Before assuming that role in 2011,
Mr. Gates was Altria’s Senior Vice President of Government Affairs.
He currently serves on the board of a private company, Aliro, and
also on a number of non-profit boards, including The Boulder Crest
Retreat for Wounded Warriors and Veteran Wellness, D.C. Sail, and
the Congressional Institute. Recently, he joined the Board of
Trustees for the Ford’s Theatre. Mr. Gates received his BA from the
University of Georgia.
- Murray Garnick serves as Executive Vice President and General
Counsel of Altria. In his role since 2017, he leads the company’s
Law Department, Regulatory Affairs and Regulatory Sciences. Mr.
Garnick previously served as Deputy General Counsel for Altria
Client Services, a subsidiary of Altria, which provides
professional services and support to Altria and its operating
companies. At Altria, Mr. Garnick has led the legal support for
sales, marketing, regulation, and product development and
intellectual property matters. He has also supervised the
management of tobacco, health and all other litigations brought
against Altria and its operating companies. Prior to joining Altria
in 2008 as Senior Vice President, Litigation and Associate General
Counsel, Mr. Garnick served for more than two decades as a senior
litigation partner at the law firm of Arnold & Porter in
Washington, D.C. and currently serves on the Board of Trustees of
Newseum in Washington, D.C. Mr. Garnick received his BA from the
University of Georgia and his JD from the University of Georgia
School of Law.
About Cronos Group
Cronos Group is a globally diversified and vertically integrated
cannabis company with a presence across five continents. Cronos
Group operates two wholly-owned Canadian licensed producers: Peace
Naturals Project Inc., which was the first non-incumbent medical
cannabis license granted by Health Canada, and Original BC Ltd.,
which is based in the Okanagan Valley, British Columbia. Cronos
Group has multiple international production and distribution
platforms and partnerships across five continents. Cronos Group
intends to continue to rapidly expand its global footprint as it
focuses on building an international iconic brand portfolio and
developing disruptive intellectual property. Cronos Group is
committed to building industry leading companies that transform the
perception of cannabis and responsibly elevate the consumer
experience.
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, or follow us on Twitter, Facebook and
LinkedIn.
Forward-Looking Statements
This news release contains "forward-looking information" and
"forward-looking statements" within the meaning of applicable
securities laws (collectively, "forward-looking statements"), which
are based on the Company’s current internal expectations,
estimates, projections, assumptions and beliefs. All information
contained herein that is not clearly historical in nature may
constitute forward-looking statements. In some cases,
forward-looking statements can be identified by the use of
forward-looking terminology such as “may”, “will”, “expect”,
“likely”, “should”, “would”, “plan”, “anticipate”, “intend”,
“potential”, “proposed”, “estimate”, “believe”, or other similar
words, expressions, phrases, including negative and grammatical
variations thereof, or statements that certain events or conditions
“may” or “will” happen, or by discussions of strategy.
Forward-looking statements include estimates, plans, expectations,
opinions, forecasts, projections, targets, guidance or other
statements that are not statements of historical fact.
Forward-looking statements are provided for the purposes of
assisting the reader in understanding our financial performance,
financial position and cash flows as at and for periods ended on
certain dates and to present information about management's current
expectations and plans relating to the future and the reader is
cautioned that such information may not be appropriate for any
other purpose. Some of the forward-looking statements contained in
this press release, include, but are not limited to, statements
with respect to: the anticipated benefits of the transaction
and our strategic relationship with Altria; including, without
limitation, our position in supporting cannabinoid innovation and
creating differentiated products and brands across medical and
recreational categories, expanding our global footprint and growing
production capacity; the composition of the Cronos Group Board; our
business and operations; our strategy for future growth; expanding
our global footprint, including the timing thereof; our intention
to build an international iconic brand portfolio and develop
disruptive intellectual property and our ability to build an
industry leading company that transforms the perception of cannabis
and responsibly elevates the consumer experience. No
forward-looking statement can be guaranteed and Cronos Group cannot
guarantee the future statements contained herein. Forward-looking
statements are based upon certain material assumptions that were
applied in drawing a conclusion or making a forecast or projection,
including management's perceptions of historical trends, current
conditions and expected future developments, as well as other
considerations that are believed to be appropriate in the
circumstances. While we consider these assumptions to be reasonable
based on information currently available to management, there is no
assurance that such expectations will prove to be correct. By their
nature, forward-looking statements are subject to inherent risks
and uncertainties that may be general or specific and which give
rise to the possibility that expectations, forecasts, predictions,
projections or conclusions will not prove to be accurate, that
assumptions may not be correct and that objectives, strategic goals
and priorities will not be achieved. A variety of factors,
including known and unknown risks, many of which are beyond our
control, could cause actual results to differ materially from the
forward-looking statements in this press release. Such factors
include, without limitation, those discussed in the Company's
management’s discussion and analysis for the three and nine month
periods ended September 30, 2018 and September 30, 2017, the
Company’s annual information form for the year ended December 31,
2017, and the Management Information Circular dated December 31,
2018, all of which have been filed on the Company’s profile on
SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Readers are
cautioned to consider these and other factors, uncertainties and
potential events carefully and not to put undue reliance on
forward-looking statements. Forward-looking statements contained
herein are made as of the date of this press release and are based
on the beliefs, estimates, expectations and opinions of management
on the date such forward-looking statements are made. The Company
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, estimates or
opinions, future events or results or otherwise or to explain any
material difference between subsequent actual events and such
forward-looking statements, except as required by applicable
law.
Cronos Group ContactAnna Shlimak(416)
504-0004investor.relations@thecronosgroup.com
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