Altria Takes Stake in Canadian Cannabis Company Cronos
December 07 2018 - 8:32AM
Dow Jones News
By Allison Prang
Altria Group Inc., the parent of tobacco company Philip Morris
USA Inc., said it is taking a 45% stake in Canadian cannabis
company Cronos Group Inc.
Altria is taking the position for $1.8 billion, or 2.4 billion
Canadian dollars. The company is buying Cronos shares for C$16.25
Canadian a share.
Altria has a warrant to buy more Cronos shares at C$19 a share
and could grow its total stake to 55%. The company can use the
warrant for four years starting after the deal closes, Altria
said.
Cronos' board will being expanded from five directors to seven
and as part of Altria's investment. Altria will get to nominate
four directors, it said.
Altria said the cannabis industry "is poised for rapid growth
over the next decade" and called cannabis "an adjacent category"
for its tobacco operations. In addition to Philip Morris, Altria
owns the U.S. Smokeless Tobacco Company LLC. It also either owns or
has stakes in alcohol companies.
The Wall Street Journal reported earlier this week that Altria
was in talks about investing in both Cronos and Juul Labs Inc., an
e-cigarette company.
Cronos, based in Toronto, owns cannabis producers Peace Naturals
Project Inc. and Original BC Ltd.
Shares of Altria rose 0.9% in premarket trading on Friday.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
December 07, 2018 08:17 ET (13:17 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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