The Denver-based brewing company said earlier this year that its Canadian unit would partner with the Hydropothecary Corporation "to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization". Several U.S. states have legalized cannabis for medical or recreational use, but pot remains illegal under federal law.
"Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria", said Howard Willard, Altria's Chairman and Chief Executive Officer. Federal data from November showed cigarette smoking among US adults reached an estimated 14 per cent in 2017, the lowest level ever.
"Altria expects its investment to help Cronos Group accelerate its growth strategies and its R&D; and intellectual property development", according to the statement.
Altria is paying 16.25 Canadian dollars per share in cash, or about US$12-a 40% premium over Cronos stock's recent trading level on the Toronto exchange, where it dual-lists with the Nasdaq.
Visit by Turkey's Erdogan boosts Venezuela's Maduro
He also reaffirmed Turkey's commitment to continue buying Venezuelan gold, which was targeted by the latest round of US sanctions. According to data released by Coin Dance, transactions in BTC in the country reached 1,284 BTC ($5.1 million).
Cronos said on Friday that the Richmond, Virginia, tobacco company will pay another $1.4 billion for warrants that if exercised, would give the Altria a 55 per cent majority ownership stake.
As part of the agreement, Altria will have the right to nominate four directors to the Cronos board, which will be expanded to seven members from five.
Altria's stock fell by almost 25 percent this year and revenue is expected to grow by only 1 percent this year and in 2019, CNN Business reported.
"We believe cannabis is an excellent strategic fit for tobacco", Jefferies analyst Owen Bennett said in a research note earlier this week. We think that model of growing your own plants is very hard to scale and to execute well. It's a logical fit, because "big tobacco knows how to cultivate crop, knows how to deal with regulators, they are at the forefront of vaporization technology, and they also arguably have less reputational risk than other fast-moving consumer goods", he said.
The exclusive partnership will give Cronos additional financial resources, regulatory expertise and product development and commercialization capabilities to tap worldwide cannabis opportunities, the company said in the announcement. In 2014, Altria acquired e-cigarette startup GreenSmoke Inc for $110 million. Peers in the marijuana sector also gained, with Aurora Cannabis Inc. rising as much as 11 percent, Aphria Inc. adding 14 percent, Canopy Growth Corp. rising 7.3 percent and Tilray Inc. gaining 4.8 percent. Altria is in talks to acquire a stake in e-cigarette start-up Juul Labs Inc., according to reports by USA media outlets.