RICHMOND, Va. – ( BUSINESS WIRE ) – The Altria Group, Inc. (Altria) (NYSE: MO) announced today
concluded an agreement to acquire newly issued shares of the Cronos Group
Inc. (Cronos Group) (TSX: CRON and NASDAQ: CRON), a world leader
Cannabinoid company headquartered in Toronto, Canada. The transaction
represents a 45% interest in the Cronos Group at a price of $ 16.25
per share for a total investment of Altria of approximately USD
$ 1.8 billion (about $ 2.4 billion). 1
As part of the agreement, Altria will have the right to conclude the contract
nominate four directors, including one independent
Board of Directors of the Cronos Group, of five up
seven directors. The agreement includes a warrant to acquire one
additional interest in the Cronos Group at a price of CAD 1
per share exercisable within four years from the closing date. If
fully exercised, the arrest warrant would appeal to Altria
Cronos Group up 10% to around 55%.
"Investing in the Cronos Group as an Exclusive Partner in the Emerging Markets
The global cannabis category is an exciting new growth opportunity
for Altria, "said Howard Willard, Altria's chairman and chief executive
Officer. "We believe that the excellent management of the Cronos Group
the skills needed to compete globally, and we look forward to it
Help the Cronos Group realize its significant growth potential. "
"Altria is the ideal partner for the Cronos Group and provides the resources
and know-how to meaningfully accelerate our strategic growth "
said Mike Gorenstein, Chairman, President and Chief of the Cronos Group
Executive Director. "The proceeds from Altria's investment will help us
faster expansion of our global infrastructure and distribution
Footprint while increasing investment in R & D and brands
resonate with our consumers. Importantly, Altria shares our vision of
Long-term value creation through innovation, and we look forward to it
The Cronos Group will be further differentiated in this area. "
This investment positions Altria to participate in the emerging world
Cannabis sector, which he believes is ready for rapid growth in the EU
next decade. It also creates a new growth opportunity in an adjacent one
Category that complements Altria's core tobacco business.
Altria expects the Cronos Group to accelerate growth with its investment
Strategies and their R & D and intellectual property development.
In addition, Altria will provide know-how to successfully support the Cronos Group
in the growing global cannabis market. These services may include
Regulatory Affairs, Regulatory Science, Compliance, Government Affairs
and brand management.
About the Cronos Group
The Cronos Group is globally diversified and vertically integrated
Cannabis company with presence on five continents. Cronos Group
operates two wholly owned Canadian license producers: Peace Naturals
Project Inc. received the first non-established medicinal cannabis
License from Health Canada and Original BC Ltd.
in the Okanagan Valley, British Columbia. The Cronos Group operates a
Portfolio of brands, including Peace Naturals a global
Medicinal Brand and two Canadian leisure brands for adults, COVE
and Spinach . Cronos Group has several
international production and distribution platforms in five countries
The Cronos Group is building an infrastructure to create an efficient infrastructure
global manufacturing footprint and diversified worldwide sales and distribution
Sales network. The Cronos Group focuses on creating and monetizing
disruptive intellectual property and the development of an iconic portfolio
Brands that resonate with consumers. The Cronos Group is committed to doing so
Build an industry-leading company that changes the way people look
Cannabis and responsibly enhances the consumer experience.
The Cronos group is not active in the US, and cannabis remains illegal in the US
Federal level. The Cronos Group puts Altria in a better position
Cannabis is licensed by the state.
Under the terms of the agreement, Altria pays $ 16.25 on completion
per share of the Cronos group issued as part of the transaction, or 41.5%
Premium on the volume-weighted 10-day average price of $ 11.48 on the
TSX on November 30, the last unaffected trading day before when
The Cronos Group announced that it had been in preliminary discussions with Altria
regarding a possible investment in the Cronos Group. The transaction will
lead to a total investment of Altria at the conclusion of
approximately $ 1.8 billion in cash (approximately $ 2.4 billion). 1
Altria will receive shares that account for 45% of the Cronos group.
The agreement also includes a warrant for acquiring additional property
Interest in the Cronos Group at a price of CAD 19.00 per exercisable share
in the next four years. Upon full exercise, the warrant would
increase Altria's stake in the Cronos Group by 10% to 55%. The aggregate
The exercise price for the warrant is approximately $ 1.0
Billion (about $ 1.4 billion), 1 subject
The transaction is subject to customary closing conditions, including
Approval of Cronos Group shareholders and receipt of regulatory approvals,
that will be pursued immediately. The transaction is expected to be completed
The first half of 2019. Finally, the Cronos Group will continue to be Canadian
Listed company headquartered in Toronto, Canada, and continuing
be led by his existing management team.
A copy of the agreement with the terms of the transaction will be
filed with the Securities and Exchange Commission (SEC) and Canada
Financing & Advisor
Altria has received a promised financing of approximately 2.4 CAD
Billions of JPMorgan Chase Bank, N.A. Altria could consider a search
sustainable financing in the future.
Perella Weinberg Partners LP is the financial advisor to Altria.
Wachtell, Lipton, Rosen & Katz and Goodmans LLP provide legal support
Advice to Altria for the deal. Hunton Andrews Kurth LLP provides
Legal counsel of Altria regarding the financing.
The Lazard Ltd. is the financial advisor to the Cronos Group. Sullivan &
Cromwell LLP and Blake, Cassels & Graydon, LLP provide legal information
Advising the Cronos Group on the deal.
Altria's wholly-owned subsidiaries include Philip Morris USA Inc. (PM
USA), USA, Smokeless Tobacco Company LLC (USSTC), John Middleton Co.
(Middleton), Sherman Group Holdings, LLC and its affiliates (Nat
Sherman), Nu Mark LLC (Nu Mark), Ste. Michelle Wine Estates Ltd. (Ste.
Michelle) and Philip Morris Capital Corporation (PMCC). Altria holds one
Participation in Anheuser-Busch InBev SA / NV (AB InBev).
The portfolio of Altria tobacco companies includes Marlboro ® ,
Black & Mild ® Copenhagen ® ,
Skoal ® VERVE ® MarkTen
and Green Smoke ® . Ste. Michelle produces
and markets premium wines sold under various brands, 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
The United States. Trademarks and service marks associated with Altria
This version refers to the property of Altria or Altria
Subsidiaries or are used with permission.
More information about Altria can be found at altria.com and on the
Altria Investor App or follow us on Twitter, Facebook and LinkedIn.
Forward-looking and cautious statements
This release contains projections for future results and others
Forward looking statements that involve a number of risks and
Uncertainties and are under the Safe Harbor provisions of the
Law on the reform of private law of 1995.
Important factors that may cause actual results and results to differ
substantially different from those contained in such forward-looking statements
fully the possibility of the parties
Transaction as expected; the possibility that one or more of the
Conditions to complete the transaction may not be met;
the possibility that the approval of the supervisory authorities or the shareholders for
The transaction can not be achieved on time, if at all. the
the ability of the parties to meet expectations as to the timing, completion,
and other matters related to the transaction; and every event that could
Termination of the agreement between Altria and Cronos
Group. Other important factors include the possibility that this is expected
The benefits of the transaction may not be realized in the expected manner
or timeframe, if any; the possible inaccuracy of the financial
projections; prevailing economic, market or business conditions
affect the parties negatively; Risks associated with the financing of
Transaction, including the risk that Altria can not secure
sustainable financing of the transaction on favorable terms, if at all,
and the risk of downgrading Altria's ratings. risked that
Transaction upsets the current plans and activities of the Cronos Group; the
Fact that Altria's earnings and financial position
Dividends paid by Cronos Group on shares of Altria may be
unfavorably affected by unfavorable exchange rates, taxes
and other factors, including the risks to which the Cronos Group is exposed in
his business; Risks associated with the interruption of the transaction
Altria, Cronos Group and their respective management; Risks associated with
the impact of the announcement of the transaction on the ability of Cronos Group
To retain and hire key personnel and to maintain relationships
Customers, suppliers and other third parties; and the other factors
in the parties' publicly filed documents, including those of Altria
corresponding annual report on Form 10-K for the year ended 31 December
2017 and quarterly report on Form 10-Q for the period
September 30, 2018 and the submission of the Cronos group to the Canadian
Securities Administration and the United States Securities Exchange
Commission, including its annual bulletin of 27 April 2018.
1 Based on a reference exchange rate of .747 USD / CAD at
Market close on December 6, as quoted by Bloomberg