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The Altria Group is in talks to take a minority stake of 20-40 percent in the electronic cigarette maker Juul Labs, according to a Reuters story by Harry Brumpton and Chris Kirkham, quoting ‘people familiar with the matter’.
The companies were said to have declined to comment.
Big tobacco companies, including Altria, have been investing in e-cigarettes as US smoking rates have declined, but their products have lost significant market share during the past year as Juul’s popularity has surged.
The sources said the talks had been ongoing during the past few months, and that the size of the stake could change.
Additionally, one source said the talks could still fall apart because of the many shareholders and regulators involved.
But such a deal was said to provide the opportunity for Juul to continue to grow with reduced risk, and without losing control of the company.
Meanwhile, Bonnie Herzog, MD Equity Research at Wells Fargo Securities said she viewed the rumors that Altria was looking to take a significant minority stake in JUUL very positively.
But Matthew L. Myers, president, Campaign for Tobacco-Free Kids, said in a statement that the possible Juul-Atria partnership underscored the need for effective Food and Drug Administration regulation of e-cigarettes and all tobacco products to stop tobacco companies from reversing decades of progress and addicting another generation of kids.