Today, March 1 – U.S. e-cigarette media vaping360 analyzes why Altria is buying NJOY. The following is the full text:
Altria Group is in talks to buy NJOY, the only independent e-cigarette company with an FDA-authorized device. Altria would also spin off its 35% stake in JUUL Labs if the acquisition happens. The Wall Street Journal first reported the story today.
Altria, the maker of Marlboro cigarettes, has no presence in the e-cigarette market other than its share of Juul. If Altria were to buy NJOY, there would be no FDA-authorized vape product not owned by a big tobacco company.
Vuse is owned by RJ Reynolds/British American Tobacco and Logic is owned by Japan Tobacco International.
NJOY last year hired financial experts to advise the company on a potential sale. At the time, the company put its sale value at $5 billion, but the Journal said current discussions involve a starting point of $2.75 billion.
Why does Altria want NJOY?
NJOY is attractive to buyers because it has two vape devices already approved by the FDA – the disposable NJOY Daily and the smoke bomb-based NJOY Ace. Ace is the only modern e-cigarette licensed by the FDA, and if NJOY gains the financial clout to increase production and expand distribution, it may be able to compete with Juul Labs’ JUUL and Vuse Alto.
NJOY currently accounts for only about 3% of the convenience store/gas station segment of the e-cigarette market. But Altria — the largest cigarette maker in the United States — has the distribution resources and cash to eliminate production challenges.
Altria currently owns 35% of Juul Labs, which it acquired in 2018 for $12.8 billion — valuing the company at $38 billion. Last September, Altria exercised its right to withdraw from a non-compete agreement with Juul Labs when Juul’s value fell below 10% of its original mark.
Altria now says Juul is worth $714 million, according to The Wall Street Journal today.
If Altria buys NJOY — or if it buys another vaping company or starts making its own — it could be forced to divest its stake in Juul to satisfy antitrust concerns.
Altria and Juhl have already been charged by the Federal Trade Commission with anticompetitive practices in a case the agency is currently appealing.
NJOY saved the e-cigarette in 2010
NJOY, Inc. was founded by attorney Mark Weiss in Arizona and began selling the first generation of e-cigarettes in 2007. After the FDA labeled e-cigarettes as unapproved drug/delivery devices and began confiscating products from China, Weiss and other manufacturers fought the agency in court, eventually winning in 2010 and keeping the nascent industry alive.
NJOY, Inc., which filed for bankruptcy in 2016, has been running NJOY since it restructured into NJOY LLC, majority-owned by hedge fund Mudrick Capital Management.