Altria’s stock closed up more than 2% Wednesday afternoon after the Wall Street Journal reported that the tobacco company is in talks to buy a “significant minority stake” in Juul Labs, a leading maker of e-cigarettes.
Altria (MO), which includes Philip Morris tobacco brands like Marlboro as well as its U.S. Smokeless Tobacco subsidiary, has seen its stock fall 17% in the past year. The percentage of U.S. adults who smoke traditional, combustible cigarettes has been declining for years, falling to 15.5% in 2016 from 20.9% in 2005, the Journal said. Juul and other e-cigarette companies also represent new competition to the Philip Morris brands.
The report, which cited unnamed sources and said the talks may not lead to an investment, helped Altria close up 2.2% during official trading hours Wednesday. The stock rose further in after-hours trading, gaining another 1.3% above its closing price.
Juul is a privately held, San Francisco-based startup that last month reached a $15 billion valuation, reaching the so-called decacorn status (that is, a startup with a valuation above $10 million) just seven months after its first venture-capital round. Juul saw an estimated $1.8 billion revenue in the past 12 months, the Journal said.
Juul said two weeks ago it would no longer accept retail orders for many of its e-cigarette flavors, including mango, fruit, crema, and cucumber Juul vaporizer pods. The company also halted all of its social-media promotions.
Those moves came a few days before the U.S. Food and Drug Administration proposed a new restrictions on the sales of flavored e-cigarettes, including limiting their sale to retail spaces inaccessible to minors. The FDA has also considered a ban all flavored e-cigarettes, citing what it calls an epidemic in teen use of smokeless cigarettes.
