Categories Cannabis, Earnings, Markets

Deal Alert: Altria Group buys mammoth stake in Canadian cannabis giant Cronos Group

Phillip Morris-parent Altria Group, Inc. (MO) today announced a deal to invest CAD 2.4 billion (about $1.8 billion) in Toronto-based cannabis giant Cronos Group (CRON).

The equity investment on a private placement basis is in exchange for common shares in Cronos. In addition to this, Altria will also receive Cronos warrants, that if fully exercised, would be an additional C$1.4 billion in proceeds.

At the close of the deal, Altria would hold about 45% ownership interest in Cronos Group shares. Factoring in the exercise of the warrants, the total potential ownership position of Altria would be about 55%.

Marijuana or weed stocks


“This strategic partnership provides Cronos Group with additional financial resources, product development and commercialization capabilities, and deep regulatory expertise to better position the Company to compete, scale and lead the rapidly growing global cannabis industry,” read a statement by the Canadian weed company.

Cronos CEO Mike Gorenstein said, “The proceeds from Altria’s investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers.”

Under the terms of the deal, Altria has agreed to acquire 146.2 million shares of Cronos at a price of CAD16.25 per share — a 41.5% premium to Cronos’ 10-day volume weighted average price on the Toronto Stock Exchange as of Nov. 30, 2018.

The Cronos group board has unanimously backed the deal, which is expected to close in the first half of 2019.

Once the deal comes through, Altria can nominate four directors, including one independent director, to serve on the Cronos Group board, which will be expanded from five to seven directors.

The agreement also makes Altria the exclusive partner of Cronos Group “for pursuing cannabis opportunities throughout the world.” JPMorgan Chase has already given committed financing of about CAD 2.4 million to Altria for the deal.


Follow our Google News edition to get the latest stock market, earnings, and financial news at your fingertips

Most Popular

Does Unity Software (U) stock has more room to run?

Last month, the IPO market was in a full swing. IPOs of Snowflake (NYSE: SNOW) and JFROG (NASDAQ: FROG) had an impressive opening day in September, the former creating a

PepsiCo (PEP): Steady snacking habits amid pandemic drive strong quarter for beverage giant

PepsiCo Inc. (NASDAQ: PEP) beat market expectations on both revenue and earnings for the third quarter of 2020. The company saw the momentum continue in its snacks business while the

Does the virus-driven boom make Electronic Arts (EA) a good investment?

With more and more people turning to virtual entertainment sources, amid the virus-related movement restrictions, video game publishers like Electronic Arts (NASDAQ: EA) are witnessing unusually high demand. Not surprisingly,

One thought on “Deal Alert: Altria Group buys mammoth stake in Canadian cannabis giant Cronos Group

Leave a Reply

Your email address will not be published. Required fields are marked *

Add Comment

Viewing Highlight