Altria and Philip Morris call off $200B merger; Juul’s CEO replaced by Altria Exec
Juul, the maker of e-cigarettes, had its CEO replaced amidst the current controversy surrounding its products.
A string of deaths, apparently due to the use of e-cigarettes, led Juul to cease product advertising and government lobbying. At least nine deaths have been attributed in recent months to vaping and e-cigarettes. The Centers for Disease Control reported 530 cases of lung injuries tied to vaping.
CEO Kevin Burns stepped down, and K. C. Crosthwaite, chief growth officer at Altria will replace him. Altria is a tobacco company that holds a major stake in Juul. It paid about $13 billion last year for a 35% stake in Juul, eyeing huge market potential in vaping.
Meanwhile, a storm of regulatory measures is afoot regarding vaping. The USFDA is said to be considering a ban on all flavored e-cigarettes. Some states may go a step further and ban e-cigarettes completely. On the other hand, Walmart has already discontinued the sale of vaping products.
Juul’s troubles put paid to the merger?
Altria and Philip Morris International opened merger discussions barely a month ago. At $200 billion, the transaction would have created a tobacco behemoth. However, Altria’s exposure to controversy-dogged Juul and cannabis probably landed the deal in cold storage.
“It is evident that significant investor pushback and the reality of holding a larger presence in the U.S. market fraught with risk around the FDA and weak volumes lead to the decision,” said analysts at Stifel.
Having called off the merger, Philip Morris and Altria will, however, jointly develop IQOS, a heated tobacco product.
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