WASHINGTON: US tobacco giant Altria, maker of major brands such as Marlboro and Chesterfield, announced Thursday that it will buy a 35% stake in popular e-cigarette maker Juul for US$12.8 billion.
The investment gives Juul a valuation of US$38 billion — more than twice its current value of US$16 billion.
“We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes,” said Altria CEO Howard Willard.
“We have long said that providing adult smokers with superior, satisfying products with the potential to reduce harm is the best way to achieve tobacco harm reduction. Through Juul, we are making the biggest investment in our history toward that goal.”
E-cigarettes expose users to significantly lower levels of potentially toxic substances, except for nicotine, the US National Academies of Sciences, Engineering and Medicine said this year.
Converting conventional cigarette smokers to vaping would therefore reduce the number of cancer cases.
Juul CEO Kevin Burns said the Altria investment had offered his company “a truly historic opportunity to improve the lives of the world’s one billion adult cigarette smokers.”
But Juul, founded in 2015, has nevertheless found itself at the centre of controversy over the appeal of its products to young people.
Numerous parents and high schools say teenagers are using Juul, raising fears that a new generation is being exposed to nicotine, which is addictive but not cancerous.
The US Food and Drug Administration has denounced “an epidemic of regular nicotine use among teens.”
In recent months, Juul has suspended in-store sales of certain flavoured offerings and scrapped its social media presence.
“We certainly don’t want youth using the product. It is bad for public health, and it is bad for our mission,” which is “eliminating cigarettes,” Burns said in November.
Under the deal with Altria, Juul will remain fully independent, a statement from Altria said.