Altria Group today announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has expired in connection with the company’s previously announced pending acquisition of NJOY Holdings.
This confirms that no further regulatory review by the federal antitrust authorities is required in connection with the transaction. Subject to the satisfaction of other customary closing conditions.
Altria states that it expects to complete the acquisition in the second quarter of 2023.
In 2022, the U.S. vapor category comprised nearly 14 million U.S. adult tobacco consumers, including 9.5 million exclusive adult vapers, according to Altria. The segment generated approximately $7 billion in U.S. retail sales and represented approximately 15 percent of total estimated equivalized U.S. tobacco volumes and more than 50 percent of total estimated equivalized smoke-free tobacco volumes.
To date, the U.S. Food and Drug Administration has approved the marketing of 23 vapor products and devices. In 2022, NJOY received marketing granted orders for the NJOY Ace device, along with several tobacco-flavored pods. The regulatory agency is still reviewing NJOY’s premarket tobacco product applications for several NJOY menthol-flavored e-vapor products.
Altria said it had multiple sources of funding for the deal, including cash from a $2.7 billion agreement with Philip Morris International last year for the IQOS Tobacco Heating System.
The NJOY deal followed an announcement by Altria that it would exchange its entire minority investment in embattled Juul Labs for a nonexclusive global license for certain of Juul’s heated tobacco intellectual property.
In total, Njoy Holdings has received six of the 23 marketing orders granted by the FDA as of this writing for the entire vaping product category, including pods, disposables and open systems.
A major factor in Altria purchasing Njoy is the Ace device didn’t come with the stigma tied to youth vaping, according to Altria CEO Billy Gifford.
“We believe Njoy has taken a responsible approach to marketing its products. According to the 2022 National Youth Tobacco Survey, Njoy-branded products are not included among the top usual brands among middle school and high school e-cigarette users. Additionally, Njoy is developing access restriction technology for its devices to further address underage use,” explains Gifford. “Our consumer research indicates that once consumers try Njoy Ace, it is a competitive product for both smokers and vapers. After trying the authorized nonmenthol Ace variant, 19 percent of surveyed smokers and 27 percent of surveyed vapers indicated that they would definitely buy the product.”
If NJOY does not receive a high enough valuation, the company could raise money and stay private, potentially paving the way for a future initial public offering, the Wall Street Journal said.
