Altria Group, one of the largest tobacco companies in North America, has agreed to invest 2.4 billion Canadian dollars ($1.8 billion) into Ontario-based cannabis producer Cronos Group, in the most significant foray by Big Tobacco into the rapidly growing cannabis industry.
Altria also agreed to make Cronos its exclusive partner to pursue international cannabis opportunities.
The entry of Altria – owner of Marlboro maker Philip Morris USA and an investor in alcohol giant Anheuser-Busch InBev – is another major milestone for the marijuana sector, coming on the heels of Constellation Brands’ bombshell investment in Canopy Growth in August.
Altria will acquire 146.2 million Cronos shares at a price of CA$16.25 per share, representing a 41.5% premium to the 10-day average price ending Nov. 30, the last unaffected trading day prior to when Cronos publicly disclosed discussions with Altria.
That will give Altria a 45% ownership interest in Cronos.
Altria also will receive warrants, which, if exercised, would increase its ownership to 55% and provide an additional CA$1.4 billion in proceeds for the integrated marijuana company.
Altria had been assessing market opportunities in the cannabis industry since at least September.
Altria’s move follows modest investments in the cannabis sector by tobacco companies Imperial Brands and Alliance One International.
In February, Alliance One International bought controlling stakes in two Canadian marijuana producers, Canada’s Island Garden and Goldleaf Pharm. United Kingdom-based medical cannabis startup Oxford Cannabinoid Technologies in June.
Cronos is traded on the Toronto Stock Exchange and the Nasdaq under the ticker symbol CRON.
This story will be update throughout the day.
Matt Lamers can be reached at [email protected]
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