Altria Group said today it would buy startup NJOY Holdings for about $2.75 billion in cash, in a fresh bet by the Marlboro maker on the e-cigarette market after losing billions through its investment in Juul.
Big tobacco firms are investing heavily in traditional cigarette alternatives as smoking rates decline globally.
But the e-cigarette category has faced tough regulatory scrutiny over under-age usage and health concerns.
Altria is betting that NJOY will prove to be an easier way to tap the market since six of the company's products have received full approval from the US Food and Drug Administration.
In comparison, Juul is still seeking approval of its products and is under the threat that the health regulator could pull its products off shelves nationwide as it briefly did last year.
"NJOY is an authorised product versus a pending product from Juul. There are no litigation challenges. The youth usage is at minimum and so that brings a level of certainty," said Altria CEO Billy Gifford.
But NJOY's US market share lags well behind that of Juul.
Altria last week exchanged its investment in Juul, last valued at $250m, for some of the vaping company's heated tobacco intellectual property.
"We are no longer limited by the terms of those agreements to pursue other strategic opportunities and partnerships," Juul said.
Altria's stake in Juul, valued at $12.8 billion in 2018, had raised antitrust concerns and the Federal Trade Commission filed a complaint in April 2020.
But an administrative law judge dismissed the complaint in February 2022.
To help fund the deal, Altria said it would use cash from a $2.7 billion agreement it entered with Philip Morris International last year for its IQOS heated tobacco products.
The NJOY deal will include an additional $500m in cash payments based on regulatory approvals of the company's other products.
