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Altria to invest $1.8 billion in Canadian cannabis producer Cronos

Reuters 

By Uday Kumar

(Reuters) - cigarette maker made a big bet on the rapidly growing marijuana industry on Friday with a $1.8 billion investment in Canadian Cronos Group Inc.

The deal gives Altria an up to 55 percent stake in Cronos and is the latest in a string of investments from consumer companies hoping to benefit from Canada's move to legalize marijuana for recreational use.

Corona announced a $4 billion investment in Canadian in August, the biggest investment so far in the industry.

With the Cronos deal, Altria will get a new opportunity to boost revenue as cigarette smoking continues to decline in the

Federal data from November showed cigarette smoking among U.S. adults reached an estimated 14 percent in 2017, the lowest level ever.

Altria will buy 146.2 million of newly issued Cronos shares at C$16.25 per share, a 16.2 percent premium to the stock's Thursday close on the

The deal includes a warrant to acquire additional ownership interest in Cronos at a price of C$19 per share over the next four years, which could raise Altria's stake to 55 percent.

After the deal is closed, Altria will have the right to nominate four directors, including one independent, to the Cronos board.

Cronos announced earlier this week that Altria could make a possible investment after reported the was in talks to acquire Cronos.

Shares of Altria were up 1.1 percent at $54.99 in premarket trading, while U.S.-listed shares of Cronos were up about 35 percent at $14.06 premarket.

($1 = 1.3393 Canadian dollars)

(Reporting by Uday in Bengaluru; Editing by Saumyadeb Chakrabarty and Shinjini Ganguli)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, December 07 2018. 19:24 IST
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