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Altria lights up USD 1.8bn Cronos investment
Posted on Friday, 07 December 2018 14:34
Altria is injecting CAD 2.40 billion (USD 1.80 billion) in Cronos Group to obtain four seats on the board of directors and a 45.0 per cent ownership interest in the Nasdaq- and Toronto Stock Exchange-listed marijuana company.
The would-be shareholder is acquiring 146.20 million stocks at CAD 16.25 apiece, representing a 41.5 per cent premium to the ten-day volume weighted average to 30th November, the last trading day prior to the talks being publicly disclosed.
It will also receive USD 1.00 billion-worth of warrants for up to an additional 10.0 per cent ownership position and which are exercisable at CAD 19.00 each for a period of four years following closing.
Altria in return has received committed funding totalling CAD 2.40 billion from JPMorgan Chase Bank and may consider seeking permanent financing in the future.
The company noted: “This investment positions Altria to participate in the emerging global cannabis sector, which it believes is poised for rapid growth over the next decade.”
It added the deal “also creates a new growth opportunity” in a category that is adjacent and complementary to its own core tobacco businesses.
Altria’s wholly-owned subsidiaries include Philip Morris and US Smokeless Tobacco and its related portfolios comprises brands ranging from Marlboro and Black & Mild to Green Smoke.
Meanwhile, the investment for Cronos provides the financial resources to better compete, scale and hold a leading position in the rapidly-growing global cannabis industry.
It will accelerate the pace of growth and expansion, which includes developing new applications for cannabinoids across a range of products and categories, such as skin care treatments.
Cronos operates two wholly-owned Canadian licensed producers: Peace Naturals Project, which received the first non-incumbent medical cannabis authorisation granted by Health Canada, and Original BC, which is based in the Okanagan Valley, British Columbia.
The group’s portfolio of brands includes Peace Naturals and two Canadian adult-use recreational brands, namely Cove and Spinach.
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