The Marlboro cigarette maker Altria Group on Thursday announced it would pay $12.8bn to take a 35% stake in Juul Labs, a marriage between an old-line tobacco giant and a fast-growing electronic-cigarette rival looking to make inroads among smokers.
The deal values San Francisco-based Juul at $38bn, more than double the roughly $16bn valuation it fetched in a July private funding round, highlighting what Altria sees as its next phase of growth in the face of declining smoking rates and cigarette sales in the United States.
"We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes," Altrias chief executive, Howard Willard, said in a statement.
For Juul, which has risen swiftly over the last three years to become the US market leader in e-cigarettes, the Altria investment is expected to give it more prominent distribution in convenience stores and other traditional retail channels. The companies said Juul will be able to reach Altria's customers through advertisements in traditional packs of cigarettes as well as direct mailers to customers.
Altria also brings years of lobbying expertise in Washington that could benefit Juul as the company navigates heightened federal scrutiny over its products' popularity among teenagers.
