After a long year of struggling to keep its products away from minors, Juul Labs struck a deal today with Altria Group, owners of Philip Morris USA and makers of Marlboro cigarettes. Bloomberg reports that the deal values Juul at $38 billion, providing the company with $12.8 billion, in exchange for a 35 percent stake in the company.
“We understand the controversy and skepticism that comes with an affiliation and partnership with the largest tobacco company in the US. We were skeptical as well. But over the course of the last several months we were convinced by actions, not words, that in fact this partnership could help accelerate our success switching adult smokers. We understand the doubt. We doubted as well,” said Juul Labs CEO Kevin Burns.
He continued explaining that there was strict criteria the company followed for a potential investor, particularly one from the Big Tobacco space. In addition to Altria’s 35 percent stake in the company, it must also use its database and distribution network to get the message of Juul out to current smokers.
After nearly a year of playing defense on trying to keep its products away from teens, this new deal marks more of an offensive push from Juul Labs. Since the beginning, the company stressed its main goal is to provide smokers with a meaningful alternative to combustible cigarettes.
Though partnering with Big Tobacco may not seem like the best way to send a message, Altria said the reason for the investment is partially due to the organization understanding change is coming to the tobacco industry.
“We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes by investing $12.8 billion in JUUL, a world leader in switching adult smokers,” saidHoward Willard, Altria’s chairman and chief executive officer. “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 to achieve that goal. We strongly believe that working with JUUL to accelerate its mission will have long-term benefits for adult smokers and our shareholders.”