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E-Cigarette Industry Has its First Billionaires
FinTech, Financial Services, Healthtech
Altria Group announced a $12.8 billion investment in Juul Labs Inc., acquiring a minority stake in the popular e-cigarette company and valuing it at $38 billion.
The investment by Altria makes Juul’s founders Adam Bowen and James Monsees the first e-cigarette billionaires, according to Bloomberg. The Bloomberg Billionaires Index notes that – assuming Altria’s transaction dilutes the holdings of current shareholders – Bowen and Monsees now both have a 3.6 percent stake in the company, worth about $1.36 billion each.
Juul is now more valuable than both Airbnb and Elon Musk’s Space X, according to Bloomberg. Altria owns a third of Juul after its investment.
In a press release announcing the deal, Altria noted that Juul will continue to operate independently. Altria is the largest tobacco company in the U.S., with subsidiaries that include Phillip Morris USA, Inc.
“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,” said Howard Willard, Altria’s Chairman and Chief Executive Officer. “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.”
E-cigarettes have become big business – to the consternation of health officials. While the products have been marketed as a safer alternative to traditional cigarettes and a way for adults to quit smoking, vaping has also become increasingly popular among younger people who have never smoked before, and some health experts warn that e-cigarettes have become a gateway for younger people to begin smoking traditional cigarettes.
In fact, the U.S. Surgeon General just issued a report calling e-cigarettes and vaping an epidemic among American youth. The report says that since 2014 e-cigarettes have been the most popular tobacco product among youth in the U.S., with its use increasing 900% among middle school and high school students between 2011-2015.
Juul has become the most dominant e-cigarette in the market; the Surgeon General’s report notes its sales climbed 600 percent between 2016 and 2017. Bowen and Monsees came up with the idea for the e-cigarettes while pursuing master’s degrees at Stanford University, according to Bloomberg.
“Altria’s investment sends a very clear message that Juul’s technology has given us a truly historic opportunity to improve the lives of the world’s one billion adult cigarette smokers,” Kevin Burns, Chief Executive Officer of Juul, said in a statement. “This investment and the service agreements will accelerate our mission to increase the number of adult smokers who switch from combustible cigarettes to Juul devices.”