Richmond, Virginia-based tobacco giant Altria Group announced today the completion of its US$1.8bn investment in Cronos Group. Headquartered in Toronto, Cronos is an industry leading producer of cannabinoid products for the recreational and medical markets.
Altria - which wholly owns subsidiary companies Philip Morris USA, U.S. Smokeless Tobacco Company, John Middleton Co, Sherman Group Holdings, as well as significant holdings in Anheuser-Busch InBev and smokeless tech startup JUUL Labs - will hold an interest of approximately 45% in Cronos Group. The deal also contains a warrant option to purchase an additional 10% of the company for approximately $14 a share, for a total investment of $1bn.
Under the terms of the transaction, Altria nominated four directors who were recently elected to serve on Cronos Group’s seven member board: Kevin C. Crosthwaite, Jr., Murray R. Garnick, Bruce A. Gates and Bronwen Evans.
“We’re excited to finalize our investment in Cronos Group and to support their talented team,” said Howard Willard, Altria’s Chairman and Chief Executive Officer. “Cronos Group is our exclusive partner in the emerging global cannabis category and represents an exciting new growth opportunity for Altria.”
“We are delighted to close this transaction and kick-off a relationship that we expect to lead to significant growth and value creation,” said Mike Gorenstein, Cronos Group’s Chairman, President and Chief Executive Officer. “Altria’s investment and the services they will provide to Cronos Group will enhance our financial resources and allow us to expand our product development and commercialization capabilities and regulatory expertise to better position Cronos Group to compete, scale and lead the rapidly growing global cannabis industry. We look forward to the many opportunities we expect this relationship to create.”