Tobacco product manufacturer Altria has booked a $4.1bn writedown on the $12.8bn investment it made in US-based e-cigarette brand Juul in late 2018, according to a Q4 2019 earnings report released yesterday.
The announcement follows a similar disclosure in Altria’s last financial report in October 2019 which stated it expected to write down $4.5bn from the investment, indicating that the stake is now valued at $4.2bn just over a year after the deal.
Juul sells battery-powered vaporisers that deliver liquid tobacco to users as an alternative to cigarettes. It has entered the UK and has plans to expand across the world in the near future.
However, the company has faced a series of regulatory challenges at home in recent months, most notably the US-wide ban in flavoured e-cigarettes at the start of this month, forcing it to cut its pod range to tobacco and menthol. It had announced plans to cut 650 jobs in October 2019.
Altria’s investment gave it a 35% stake in Juul, valuing it at $38bn, but the revaluation of the company’s shares would cut that to less than $12.5bn. It secured $785m in convertible note financing in August 2019 but has not disclosed the investors or valuation.
Investment firm Tiger Global Management had provided a reported $600m to lead a $650m round for Juul in mid-2018, following a total of $117m in earlier funding according to regulatory filings.
Image courtesy of Juul Labs, Inc.
