Altria Cuts Juul Valuation to Below $5 Billion
By Renata Geraldo
Altria Group Inc. slashed the value of its investment in Juul
Labs Inc., estimating the e-cigarette maker is worth less than $5
billion, or half as much as Juul says it is now worth.
Juul told employees Thursday it had cut its own internal
valuation to $10 billion, down from $13 billion earlier this
Either estimate is a sharp decline from the $38 billion
valuation Altria put on Juul when the Marlboro maker took a 35%
stake in the company about two years ago. The investment made the
once-fast-growing vaping company one of the most valuable startups
in the world.
Over the past two years, Juul's sales have tumbled and its
growth prospects have darkened. It has faced regulatory crackdowns,
lawsuits and investigations into its marketing practices. Juul last
month said it was cutting its workforce in half and was considering
pulling out of most overseas markets.
Altria now values its stake in Juul, for which it paid $12.8
billion in cash, at $1.6 billion as of Sept. 30.
Altria Chief Executive Billy Gifford said during a conference
call with investors that Altria based its revised valuation of Juul
on expectations for lower revenue over time, and cited the
startup's pullback from international expansion and competition in
"Altria continues to believe that e-vapor products, including
Juul, can play an important role in tobacco harm reduction," Mr.
In a letter Thursday to employees, Juul CEO K.C. Crosthwaite
said he wasn't surprised by the company's internal valuation
falling and that he expected "other investors to also arrive at
lower valuation marks that factor in our recent restructuring."
Juul declined to comment on Altria's valuation cut.
E-cigarette sales have fallen since the Food and Drug
Administration earlier this year barred the sale of some flavored
vaping products. Meanwhile, Altria has said that Americans are
smoking traditional cigarettes more during the pandemic because
they are spending less on travel and entertainment and have more
opportunities to light up.
Altria's Marlboro brand accounts for 43% of all cigarettes sold
in the U.S.
The Federal Trade Commission sued in April to unwind Altria's
investment in Juul, accusing the tobacco giant of violating federal
antitrust laws when it took a stake in the e-cigarette maker. An
administrative trial is scheduled to begin next year.
The soured Juul investment pushed Altria to another loss in the
latest quarter, offsetting rising sales of its traditional
cigarettes. The Richmond, Va., company reported a loss of $952
million, compared with a loss of $2.6 billion a year ago, when it
took a bigger write-down on Juul.
Sales rose to $7.1 billion in the quarter from $6.9 billion a
year ago. Revenue from smokable products was $6.3 billion.
(END) Dow Jones Newswires
October 30, 2020 10:30 ET (14:30 GMT)
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