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Marlboro Maker Altria Makes Big Bet on E-Cigarettes With $12.8 Billion Stake in Juul Labs

Juul Labs sold a 35% stake to tobacco giant Altria in a $12.8 billion deal that turns the e-cigarette maker into one of Silicon Valley’s most valuable privately held companies.

The deal values the San Francisco-based company at $38 billion and will put its products next to Marlboro cigarettes on American retail shelves. Altria, which is focused on the U.S. market after spinning off Philip Morris International in 2008, will get one-third of the seats on Juul’s board upon antitrust clearance.

With smoking in decline, the deal furthers Altria’s push away from cigarettes and into higher-growth businesses. That includes its investment in Canadian cannabis company Cronos, which gave it a 45% stake and an option to take majority control in the future.

For Juul, the tie-up more than doubles its valuation from just a few months ago, when it was worth $16 billion after Tiger Global Management led a $1.2 billion investment. The Altria deal makes Juul more valuable than Airbnb or Elon Musk’s SpaceX, though still less than Uber Technologies.

Since launching in 2015, Juul has been a runaway success, attracting the ire of parents and regulators who say the company’s devices hook teenagers. The startup has positioned itself as a technology company on a mission to help addicted smokers quit tar-burning cigarettes.

As part of the agreement, Marlboro will put promotional material for Juul’s products in its cigarette cartons, according to a statement Thursday. Altria, which sells its cigarettes only in the U.S., benefits from international exposure as Juul expands to new markets outside the country.