• April 9, 2020

Altria’s crown Juul?

Altria is in talks to take a significant minority stake in vapor company Juul Labs, The Wall Street Journal (WSJ) reported on Wednesday. A deal is estimated to be several weeks away.

Wells Fargo analyst Bonnie Herzog wrote that it’s “finally, it’s all coming together and making sense” in a recent email. “We’ve longed believed [Altria] has wanted to (and should) acquire JUUL Labs, Inc. So if today’s (Nov. 28) rumors are true that [Altria] is taking a ‘significant minority’ stake in JUUL (as reported by WSJ without comment from mgmt.), we view this as very positive,” Herzog wrote. “While details remain sparse, we think MO could be investing around $4 billion -$7 billion to acquire a ~30-40 percent stake in JUUL based on an estimated $15 billion – $16 billion valuation for the total company.”

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A tie-up between the two companies could give Juul experience that Altria has gained through decades of regulation and litigation, while giving Altria a jolt in revenue, according to Herzog. However, a deal would mark a significant shift for Juul, which has repeatedly distanced itself from major tobacco companies like Altria.

Juul declined to comment. Altria said it doesn’t comment on “rumors and speculation.”