RICHMOND, Va .– [ BUSINESS WIRE ) – Altria Group, Inc. (Altria) (NYSE: MO) announced today that it hasentered into…
RICHMOND, Va .– [ BUSINESS WIRE ) – Altria Group, Inc. (Altria) (NYSE: MO) announced today that it has
entered into an agreement to acquire new shares in Cronos Group
Inc. (Cronos Group) (TSX: CRON and NASDAQ: CRON), a leading global
cannabinoid company headquartered in Toronto, Canada. The transaction
represents a 45% stake in Cronos Group at a price of CAD 16.25
per share, for a total investment of Altria of approximately USD
$ 1.8 billion. 1
As part of the agreement, Altria will at the time of closing be entitled to
appoint four board members, including an independent director, to earn
Cronos Group Board, which will be expanded from five to
seven leaders. The agreement contains a guarantee to acquire one
Additional ownership in Cronos Group at a price of CAD 1
per share that can be exercised over four years from the balance sheet date. If
was exercised in its entirety, the decision would increase Altrias ownership in
Cronos Group with 10% to about 55%.
“Invest in Cronos Group as our exclusive partner in the emerging
The global cannabis category represents an exciting new growth opportunity
for Altria, “said Howard Willard, Altrias Chairman and Chief Executive Officer
Officer. “We believe that Cronos Group’s excellent management team has
built capacity required to compete globally and we look forward to
To help Cronos Group realize its significant growth potential. “
“Altria is the perfect partner for Cronos Group, which provides the resources
and skills we need to meaningfully accelerate our strategic growth “
said Mike Gorenstein, Cronos Group Chairman, President and CEO
Director. “The revenues from Altria’s investment will enable us
to rapidly expand our global infrastructure and distribution
footprint, while increasing investment in R & D and brands like
Resonate with our consumers. It is important that Altria shares our vision of
drive long-term value through innovation, and we look forward to
continues to distinguish Cronos Group in this area. “
This investment positions Altria to participate in the emerging global
cannabis sector, which it considers ready for rapid growth worldwide
next decade. It also creates a new growth opportunity in an adjacent
category that complements Altria’s nuclear tobacco company.
Altria expects its investment to help Cronos Group accelerate its growth
strategies and R & D and development of intellectual property rights.
In addition, Altria will offer expertise to help Cronos Group to benefit
in the growing global cannabis market. These services may include
legislation, legislation, compliance, government affairs
and brand management.
About Cronos Group
Cronos Group is a globally diversified and vertically integrated
cannabis companies with a presence on five continents. Cronos Group
runs two wholly owned Canadian licensed producers: Peace Naturals
Project Inc., who received the first non-responsible medical cannabis
license granted by Health Canada, and Original BC Ltd., which is based
in Okanagan Valley, British Columbia. Cronos Group operates a
portfolio of trademarks that include Peace Naturals a global
medical brand and two Canadian adult leisure articles, COVE ™
and Spinach ™ . Cronos Group has several
International production and distribution platforms over five years
Cronos Group establishes infrastructure to create an efficient
global production impressions and diversified global sales and
distribution network. Cronos Group focuses on creating and earning money
interfering intellectual property rights and growing a portfolio of iconic
brands that reason with consumers. Cronos Group is involved in
build an industry-leading company that transforms the perception of
cannabis and in a responsible manner raises consumer experience.
Cronos Group has no US operations, and cannabis is still illegal
federal level. Through Cronos Group, Altria is better placed should
Cannabis is federally allowed.
According to the agreement, Altria will pay CAD 16.25 upon closing
per share of Cronos Group shares issued in the transaction, or a 41.5%
prize for the 10-day volume-weighted average price of CAD 11.48 USD on
TSX by 30 November, the latest unaffected trading day before when
Cronos Group announced that it was preliminary discussions with Altria
regarding any investment in Cronos Group. The transaction will
resulting in an aggregate investment of Altria upon closing equal to
approximately $ 1.8 billion in cash (approximately 2.4 billion CAD). 1
Altria will receive shares representing a 45% stake in Cronos Group.
The agreement also contains a warrant to acquire additional ownership
Interest for Cronos Group at a price of CAD 19.00 per share is exercised
in the next four years. If exercised in its entirety, it would be required
Increase Altrias ownership in Cronos Group by 10% to 55%. The unit
The exercise price for the warrants corresponds to approximately USD $ 1.0
billion (approximately CAD 1.4 billion), 1 subject to
The transaction is subject to normal closing terms, including
Cronos Group shareholders approval and receipt of approval by the authorities,
which will be carried out promptly. The transaction is expected to be closed in
first half of 2019. Upon closing, Cronos Group will remain Canadian
publicly traded company headquartered in Toronto, Canada and continues to
led by its existing management team.
A copy of the agreement that contains the terms of the transaction will be
filed with the Securities and Exchange Commission (SEC) and Canadian
Finance and Advisory Services
Altria has received committed funding totaling about 2.4 USD
Billions from JPMorgan Chase Bank, N.A. Altria may consider searching
permanent funding in the future.
Perella Weinberg Partners LP is financial adviser to Altria.
Wachtell, Lipton, Rosen & Katz and Goodmans LLP provide legal information
afford Altria for the deal. Hunton Andrews Kurth LLP provides
Legal Advisor to Altria regarding funding.
Lazard Ltd is financial adviser to Cronos Group. Sullivan &
Cromwell LLP and Blake, Cassels & Graydon, LLP provide legal
Advice to Cronos Group for the deal.
Altrias wholly owned subsidiaries include Philip Morris USA Inc. (PM
USA), U.S. Smokeless Tobacco Company LLC (USSTC), John Middleton Co.
(Middleton), Sherman Group Holdings, LLC and its subsidiaries (Nat
Sherman), Nu Mark LLC (Nu Mark), Ste. Michelle Wine Estates Ltd. (Ste.
Michelle) and Philip Morris Capital Corporation (PMCC). Altria has one
capital investments in Anheuser-Busch InBev SA / NV (AB InBev).
Trademark portfolios of Altrias tobacco operators include Marlboro ® ,
Black & Mild ®Copenhagen ® ,
and Green smoke ® . Ste. Michelle produces
and markets premium wines sold under different labels, including Chateau
Ste. Michelle ®Columbia Crest ® ,
14 Hands ® and Stag’s Leap Wine Cellars ™ ,
and it imports and markets Antinori ®Champagne
Nicolas Feuillatte ™Torres ®
and Villa Maria Estate ™ Products in
United States. Trademarks and service marks related to Altria
referred to in this edition is the property of Altria or its
subsidiary or used with permission.
More information about Altria is available at altria.com and at
Altria Investor app or follow us on Twitter, Facebook and LinkedIn.
Forwarding and Caution
This release contains forecasts for future results and others
forward looking statements that involve a number of risks and
uncertainties and are made in accordance with the Safe Harbor regulations from
Reform Act of 1995.
Important factors that may cause actual results and results to differ
substantially from those contained in such forward-looking statements
include, without limitation, the ability of the parties to pursue
transaction that expected the possibility of one or more of
The conditions for completing the transaction can not be met.
the possibility that laws or shareholder approvals are required
The transaction can not be obtained on time, if at all
the parties’ ability to meet the expectations of the time, completion,
and other matters relating to the transaction; and every event as a customer
give rise to termination of the agreement between Altria and Cronos
Group. Other important factors include the possibility that they expected
The benefits of the transaction can not occur in the expected way
or timeframe, if at all the potential error in the financial
projections; prevailing economic, market or business conditions
negatively affect the parties risks in connection with the financing of
transaction including the risk that Altria can not be secured
Permanent financing for the transaction on favorable terms, if at all
and the risk of downgrading in Altria’s credit rating; risk to
The transaction interferes with Cronos Group’s current plans and operations. the
fact that Altrias reported earnings and financial position and any
Dividends paid by Cronos Group for shares owned by Altria may be
negatively affected by unfavorable exchange rates, tax
and other factors, including the risks encountered by Cronos Group
its business risks related to the break in the transaction to
Altria, Cronos Group and their respective management; risks related to
The effect of the transaction announcement on Cronos Group’s ability
to maintain and hire key personnel and maintain relationships with
customers, suppliers and other third parties and the other factors
detailed in the parties’ publicly filed documents, including Altrias
respective Annual Report for Form 10-K for the year ending December 31,
2017 and quarterly report on Form 10-Q for the period ended
September 30, 2018 and Cronos Group Applications with Canadian
Securities Management and the United States Securities Exchange
Commission, including its annual information form dated 27 April 2018.
1 Based on reference exchange rate of 0.747 USD / CAD at
The market closes on December 6, cited by Bloomberg