Altria to buy NJOY Holdings for $2.75B

Henrico County firm entered definitive agreement

Published March 6, 2023 by Katherine Schulte

Henrico County-based Altria Group Inc. has entered into a definitive agreement to acquire e-vapor maker NJOY Holdings Inc. for approximately $2.75 billion in cash, with a potential additional $500 million in payments, Altria announced Monday.

“We believe we can responsibly accelerate U.S. adult smoker and competitive adult vaper adoption of NJOY Ace in ways that NJOY could not as a standalone company,” Altria CEO Billy Gifford said in a statement. “As a result of this transaction, Altria’s enhanced smoke-free portfolio will include full global ownership of products and technologies across the three largest smoke-free categories and a joint venture with JT Group for the U.S. commercialization of heated tobacco stick products.”

Part of the funding of the deal will come from an expected $1.7 billion payment plus interest from Philip Morris International Inc. by July, according to Altria’s presentation for investors Monday. The company says it expects its earnings per share this year to remain between $4.98 to $5.13, up from 2022’s rate of $4.84. Altria made $25 billion in net revenues in 2022, a 3.5% decrease from 2021.

The announcement follows Altria ending its noncompete deal with Juul Labs Inc. in September 2022. Altria invested $12.8 billion in the e-cigarette company before Juul faced lawsuits claiming the company had illegally marketed its products to teens and faced possible bankruptcy.

In a deal that was effective March 3, Altria exchanged its investment in Juul, worth $250 million on Dec. 31, 2022, for some of its heated tobacco intellectual property.

The company announced its partnership with Japan Tobacco Group in October 2022. The $150 million deal, in which Altria subsidiary Philip Morris USA has a 75% economic interest in the Horizon Innovations LLC joint venture and Japan Tobacco International has 25%, includes marketing of heated tobacco products in the United States and Japan.

Arizona-based startup NJOY has six e-vapor products and devices that received marketing granted orders (MGOs) from the U.S. Food and Drug Administration in 2022. Its flagship e-vapor product is the Ace, which is available in about 33,000 retail stores in the U.S. The company also sells NJOY Daily disposable vapor products in about 23,000 U.S. retail stores.

NJOY is developing technology to restrict user access for its devices. The tech would use Bluetooth to authenticate a user before unlocking the device.

The additional $500 million in cash payments depend on NJOY meeting several terms. The company will receive $250 million if the FDA issues an MGO for the NJOY Ace Pod, menthol flavor, 5% nicotine concentration, either alone or in combination with the Ace Pod, menthol flavor, 2.4% nicotine concentration.

If the FDA issues an MGO only for the product with a 2.4% concentration, NJOY will receive $125 million.

NJOY is currently preparing premarket tobacco product applications (PMTAs) for the FDA for two non-tobacco or menthol flavored Ace pods that would be paired with its access-restriction technology. NJOY will receive a payment of $125 million if the FDA issues an MGO for either pod product, and $250 million if both receive MGOs.

In the Centers for Disease Control and Prevention’s 2022 National Youth Tobacco Survey, NJOY products were not among the most often used usual brands for middle and high school e-cigarette users.

Altria’s stock was valued at $46.94 just before 10 a.m. Monday, with an increase of .41 points from opening.

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