US-based e-cigarette manufacturer Juul Labs is facing internal opposition to a deal with tobacco producer Altria Group over a deal that would value it at approximately $30bn, Axios has reported.
Altria first approached Juul in early 2018, offering an investment or an acquisition that would have valued it at approximately $5bn. Juul declined the initial approach but Altria continuously increased its offer, though details of that process remain undisclosed.
News of Altria’s interest emerged last week, leading to Juul staff protesting any such deal, arguing that the startup’s stated mission of helping smokers quit traditional cigarettes would not square with welcoming a shareholder that markets tobacco.
Juul was spun out of electronic vaporiser manufacturer Pax Labs in July 2017 to market an e-cigarette first released by its parent company two years earlier. The company produces its own cartridges and aims to closely replicate the experience of smoking cigarettes.
The company faced a setback last month when US regulator the Food and Drug Administration (FDA) banned the retail sale of flavoured e-cigarette cartridges – including Juul’s most popular product, a mango-flavoured pod – and tightened online age verification regulations.
The FDA’s decisions are said to have reduced future regulatory risk however, meaning Juul’s valuation for the potential Altria deal has nevertheless doubled from $15bn in July this year, when financial services group Fidelity Investments led a $1.2bn funding round for the company.
Discussions between Juul Labs and Altria were followed by a Reuters report yesterday stating that the corporate was also pursuing a potential investment in Nasdaq-listed cannabis producer Cronos.
Altria is reportedly interested in investing in both Juul Labs and Cronos stakes as a way of diversifying its core business.
