Marlboro parent Altria eyes e-cigarette maker NJOY

Altria is in advanced discussions to acquire e-cigarette startup NJOY Holdings for at least $2.75 billion, with plans to sell its stake in Juul Labs, the Wall Street Journal reports, citing people familiar.

Why it matters: The Marlboro maker is looking for its next leg of growth.

What’s happening: Under the proposed deal, NJOY could possibly receive an additional $500 million should they reach certain regulatory milestones, per the WSJ report.

• The WSJ reported in June that NJOY hired advisers to explore a sale.

Catch up fast: Altria acquired a 35% stake in vaping company Juul Labs for $12.8 billion in 2018.

• But Juul has come close to filing for bankruptcy as the e-cigarette maker became entangled with federal regulators and lawsuits that claimed the company had targeted minors.
• The fate of whether its e-cigarettes can stay on the U.S. market is also up in the air, as the company is in a quarrel with the Food and Drug Administration over that issue.
• Altria ended its noncompete with Juul last year, paving the way for the company to explore other e-cigarette contenders.

Yes, but: NJOY’s products have received clearance from federal regulators.

Threat level: The Biden administration wants to cut the amount of nicotine in cigarettes sold in the U.S., further spurring a rush for tobacco companies to find new ways to grow.

• Plus, most Americans are supportive of a tobacco ban, according to a CDC study.

What’s next: The deal could be announced as soon as next week, according to WSJ. But there’s still a possibility that the talks fall through.

Representatives at Altria and NJOY couldn’t immediately be reached for comment.