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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 2.4% in premarket trading on Friday.
Write to Allison Prang at email@example.com
(END) Dow Jones Newswires
December 07, 2018 08:19 ET (13:19 GMT)
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