Marlboro producer places $1.8 billion bet on marijuana

Marlboro producer places $1.8 billion bet on marijuana

One of the world's biggest tobacco companies is diving into the cannabis market with a $2.4 billion investment in Cronos Group, a Canadian medical and recreational marijuana company.

With the Cronos investment, Altria will get a new opportunity to boost revenue as cigarette smoking continues to decline in the United States.

Cronos and other cannabis stocks have been thrust into the spotlight in the past few months following the legalization of recreational marijuana in Canada in October, as well as legalized recreational and medical pot in several U.S. states last month. Investors, meanwhile, have been pouring money into cannabis companies that operate in multiple US states, pivoting away from Canada.

The entry of Altria - owner of Marlboro maker Philip Morris USA and an investor in alcohol giant Anheuser-Busch InBev - is another major milestone for the marijuana sector, coming on the heels of Constellation Brands' bombshell investment in Canopy Growth in August.

Altria will acquire 146.2 million Cronos shares at a price of CA$16.25 per share, representing a 41.5% premium to the 10-day average price ending November 30, the last unaffected trading day before Cronos publicly disclosed discussions with Altria.

Maduro departs to meet Putin in Moscow
Venezuela , overwhelmed by hyperinflation, a severe shortage of commodities and a strong recession, has reportedly exported around $ 700 million worth of gold to Turkey .

Shares of other cannabis companies rallied after the announcement.

"Altria expects its investment to help Cronos Group accelerate its growth strategies and its R&D; and intellectual property development", according to the statement.

According to a news release, Altria's resources will better position the Cronos Group "to support cannabinoid innovation, create differentiated products and brands across medicinal and recreational categories, and expand its global footprint and growing production capacity". "And they're seeing a ton of growth", he said in an interview.

Altria is also in talks to take a minority stake of between 20 per cent and 40 per cent in e-cigarette maker Juul Labs Inc, sources told Reuters last month. It has entered into joint ventures to boost its presence and capacity in Canada and overseas, including in Israel and Australia. The transaction is expected to close in the first half of 2019. "We think that that model of growing your own plants is very hard to scale and execute well".

After the deal is closed, Altria will have the right to nominate four directors, including one independent, to Cronos' board comprising seven directors in total.

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