Published: Sat, December 08, 2018
Markets | By Otis Pena

Marlboro owner Altria makes £1.4bn bet on cannabis

Marlboro owner Altria makes £1.4bn bet on cannabis

In June, British tobacco giant Imperial Brands was among investors taking a stake in Oxford Cannabinoid Technologies, a United Kingdom-based medical cannabis startup.

Cronos plans to focus on cannabis genetics, innovation and branding, while contracting with farmers to grow the product and working with retailers.

Cronos has benefited in recent months from Canada's legalization of recreational marijuana as well as more states jumping on the recreational and medical pot bandwagon last month through voter initiatives.

Altria's ability to handle regulatory pressures could help the company navigate complex legal issues such as product registration and taxation as more cannabis markets open up around the world, Cronos said.

Cronos shares, meanwhile, surged as much as 33 percent to $13.95 in NY. Peers in the marijuana sector also gained, with Aurora Cannabis Inc. rising as much as 11 percent, Aphria Inc. adding 14 percent, Canopy Growth Corp. rising 7.3 percent and Tilray Inc. gaining 4.8 percent.

The deal grants Altria the option to acquire a controlling stake in Cronos at CAD $19 per share and to nominate four executives to Cronos Group's board of directors.

However, the global cannabis opportunity remains "large and untapped", said Vivien Azer, an analyst with Cowen.

Arsenal players 'reminded of responsibilities' following laughing gas video
Raheem Sterling was warned by his then club Liverpool after footage emerged of him using the substance in 2015. Possession of the drug is not illegal in the United Kingdom , but its sale and production is restricted.


The first Canadian cannabis grower to list its shares on a USA stock market, Cronos said it plans to spend the money on product innovation, noting Altria's expertise in device technology and automation, and fuel Cronos's expansion into new countries amid a global shift toward loosening restrictions on the drug. The offer represents a 16.2-percent premium to the stock's Thursday close on the Toronto Stock Exchange.

The cigarette giant has invested nearly $4m into the Canadian firm.

The deal structure was driven by an appetite on Cronos' part to entertain discussions with other parties, although it is not guaranteed that any future discussions will result in product partnerships or new deals, according to one person familiar with the matter.

Altria now has been grappling with a Food and Drug Administration that's intent on strengthening restrictions on some of the vaping products that have caught on with younger users. For its cash, the seller of cigarette brands such as Marlboro will get a 45% stake in Cronos and a majority of the seats on the.

Shares of other cannabis companies rallied after the announcement.

Altria's huge investment lit up shares of cannabis companies that have begun to set up shop in Canada, where recreational use was legalized this year. "It's worth noting that Altria does not grow their own tobacco".

"That experience, we think, is going to be very important as we try to accelerate new product categories". "That was something we're very aligned with".

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