Tobacco giant Altria invested $12.8 billion in Juul, taking a 35 percent stake in the e-cigarette maker that valued it at $38 billion as they begin to embark on a new path that relies less on traditional cigarettes.
The all-cash deal announced Thursday has drawn criticism for Juul, which has positioned itself as an enemy of Big Tobacco.
"We are taking significant action to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes by investing $12.8 billion in Juul, a world leader in switching adult smokers," Altria CEO Howard Willard said in a statement. "We have long said that providing adult smokers with superior, satisfying products with the potential to reduce harm is the best way to achieve tobacco harm reduction."
He said it's Altria's biggest investment "toward that goal." The tobacco maker's shares fell 2.5 percent in morning trading.
Juul, which split from parent company Pax in 2017, captured 75 percent of the e-cigarette market in just three years, with most of the growth coming in the past year. Juul has about $1.5 billion in revenue, according to people familiar with the matter because the information is confidential. The entire category has posted $2.95 billion in sales in the year ended Dec. 1, according to Nielsen data compiled by Wells Fargo analyst Bonnie Herzog.