Cannabis Part and Investment
Big Tobacco, meet pot.
The Marlboro cigarette producer Altria Group Inc. said on Friday that it had made a deal to buy a large stake in Toronto's Cannabis producer, Cronos Group Inc.
Richmond, Va.-based Altria pays $ 2.4 billion to buy a 45 percent stake in Cronos for $ 16.25. The deal will last until 30 November. The agreement also contains an order to show that if implemented, Altria could increase ownership of another $ 1.4 billion to another 55 per cent.
Cronos said he would use the money to expand the new product offerings and regions that legalized the joke.
The deal could provide a lift for a sector that has caused a contraction in the stock market in recent weeks following the introduction of more competitive sales amongst supply shortage reports across Canada. Altria is also a large investment or joint venture with a cannabis strategy following the alcoholic beverage giants Constellations Brands Inc. and Molson Coors Brewing Co., Inc., and another major global player to enter the legal marijuana field. This will allow investors to anticipate what a Canadian cannabis company might be doing besides a deal from a major company.
The shares of Cronos jumped to 23 percent in Toronto just before 10 o'clock. Like other major Canadian cannabis companies, Altria's shares increased by 2 percent.
Altria has been talking to marijuana companies for months. Resources, Aphria Inc. and CannTrust Holdings Inc. as well as other manufacturers preferred to invest. Altria is the first big tobacco company to write a big check to a Canadian cannabis company.
The agreement with Cronos is expected to end in the first half of 2019. As part of the agreement, Altria will nominate four executives to the Cronos board, which will be expanded from five to seven members. JPMorgan Chase Bank N.A., a subsidiary of JPMorgan Chase & Co., provides funding to Altria.
Cronos confirmed that he met with Altria after the Reuters report on 30 November.
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