Categories Cannabis, Earnings, U.S. Markets News
Deal Alert: Altria Group buys mammoth stake in Canadian cannabis giant Cronos Group
Phillip Morris-parent Altria Group, Inc. (MO) today announced a deal to invest CAD 2.4 billion (about $1.8 billion) in Toronto-based cannabis giant Cronos Group (CRON).
The equity investment on a private placement basis is in exchange for common shares in Cronos. In addition to this, Altria will also receive Cronos warrants, that if fully exercised, would be an additional C$1.4 billion in proceeds.
At the close of the deal, Altria would hold about 45% ownership interest in Cronos Group shares. Factoring in the exercise of the warrants, the total potential ownership position of Altria would be about 55%.
“This strategic partnership provides Cronos Group with additional financial resources, product development and commercialization capabilities, and deep regulatory expertise to better position the Company to compete, scale and lead the rapidly growing global cannabis industry,” read a statement by the Canadian weed company.
Cronos CEO Mike Gorenstein said, “The proceeds from Altria’s investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers.”
Under the terms of the deal, Altria has agreed to acquire 146.2 million shares of Cronos at a price of CAD16.25 per share — a 41.5% premium to Cronos’ 10-day volume weighted average price on the Toronto Stock Exchange as of Nov. 30, 2018.
The Cronos group board has unanimously backed the deal, which is expected to close in the first half of 2019.
Once the deal comes through, Altria can nominate four directors, including one independent director, to serve on the Cronos Group board, which will be expanded from five to seven directors.
The agreement also makes Altria the exclusive partner of Cronos Group “for pursuing cannabis opportunities throughout the world.” JPMorgan Chase has already given committed financing of about CAD 2.4 million to Altria for the deal.
Follow our Google News edition to get the latest stock market, earnings, and financial news at your fingertips
Most Popular
Earnings Preview: Johnson & Johnson bets on innovation to stay in growth mode
Over the years, Johnson & Johnson (NYSE: JNJ) has remained a dominant player in the medical industry, benefitting from its unique business model and growth strategy focused on constant innovation.
Key takeaways from PepsiCo’s Q3 2024 earnings report
Shares of PepsiCo, Inc. (NASDAQ: PEP) gained over 1% on Tuesday even though the company delivered mixed results for the third quarter of 2024 and lowered its guidance for the
PEP Earnings: All you need to know about PepsiCo’s Q3 2024 earnings results
PepsiCo, Inc. (NASDAQ: PEP) reported its third quarter 2024 earnings results today. Net revenue dipped 0.6% to $23.3 billion compared to the same period a year ago. Organic revenue growth
Comments