The Marlboro producer Altria Group Inc. will invest $ 2.4 billion in the Canadian cannabis producer Cronos Group Inc – a major mark on the pot industry of large Tobacco – the global market for weed continues to grow.
The company's parent, the Virginia-based company behind Marlboro, Parliament and other cigarette brands, will purchase a 45 per cent stake in Cronos on Friday.
Altria will also be able to invest up to $ 1.4 billion in four years to increase the ownership share of the Toronto-based cookware manufacturer to 55%.
Büyüt Altria brings the scale, expertise and complementary capabilities that we believe will allow us to expand the scope and scale our company,, said Cronos president and CEO Mike Gorenstein. Friday.
Gorenstein said Cronos will remain a Canadian company in Toronto.
As part of the agreement, Altria will have the right to nominate four executives to the Cronos board, which will be expanded from five to seven members.
Altria's investment as an elite partner in Cronos' rising global cannabis category is a "exciting new growth opportunity" for the company, said president and chief executive officer Howard Willard.
. We believe that the Cronos Group's excellent management team has built up the capabilities to compete globally and we hope to help Cronos Group realize its significant growth potential, os he said.
Cronos shares bouncing
The shares of Cronos are at $ 18.56 on the Toronto Stock Exchange at $ 13.98 on Thursday. A rose. On Friday it increased by $ 17.06 or 22.03 percent.
On October 17, Canada became the second country to legalize the recreational use of the world. Several US states have legalized the cannabis for medical or recreational use, but the federal law says the pot remains legal.
However, the political climate in the south of the border is warming for cannabis. For example, the US legislative process to allow full legalization of industrial cannabis in the US and the restrictions on convenience on cannabis substance CBD are entering the US legislative process.
During the US interim elections, Michigan became the last state to ratify the legalization of entertainment cannabis, and Utah and Missouri approved the drug for medical purposes.
At the same time, the number of countries that have legitimized medical cannabis continues to increase; South Korea, the last green light.
While global cigarette consumption continues to decline, Big Tobacco is looking for new areas for e-cigarettes and now pot-like growth.
Marlboro & # 39; s $ 2.4 billion bet in Cronos, Big Tobacco by marijuana is the biggest move and is good for the general sector, GMP Securities analyst Martin Landry.
Üyor When you look at the commitments made by Altria, they look to the sector for the next 10 to 20 years and see a ton of growth, Bir he said in an interview.
Altria's movement has also made more similar agreements in the sector.
Landry said the agreement was "a big confirmation" for Cronos and "reassuring" for the sector because of concerns that pot companies might have very high values.
After the agreement was announced, many stocks in the floating sector ended on Friday. Pot producer Canopy Growth Corp.'s shares in Toronto rose to two percent in afternoon trading. Aurora Cannabis stock increased by about eight percent in the afternoon on Friday after making a new supply deal to Mexico.
The value of Canadian cannabis companies that have been publicly traded increased to 17 October, when cannabis sales became legal under the rules and regulations set by Ottawa and states.
Major regime stocks have been withdrawn from high rates in recent weeks, amid recent sales and shortage of supply and complications reports.
However, the global cannabis opportunity remains "big and unused", while the analyst Vivien Azer of Cowen. The Altria-Cronos agreement is "encouraging" given the wide potential use of cannabis, such as medicines and health and health products, and gave customers a note.
Following the investments of major beverage companies
Altria's investment marks the recent move by the US company to an industry established to touch the long-established Canadian cannabis industry.
In August, alcohol giant Constellation Brands announced that it would invest $ 5 billion in Canadian cookware manufacturer Canopy Growth Corp., a 5% investment. As part of the agreement, Constellation, when used in conjunction with its existing warrants, has also acquired new warrants to increase its ownership in Canopy beyond 50 percent.
In addition, US tobacco leaf merchant Alliance One International said its subsidiary earned 75 percent of its shares in the Canadian Island Garden based in Charlottetown in January.
Meanwhile, Molson Coors, Quebec based cannabis manufacturer Hexo Corp. in October. Along with Truss launched a joint venture called Truss.
Before Friday's announcement, Cronos confirmed that he was in talks with Altria.
Altria agreed to pay $ 16.25 per share to acquire 146.2 million Cronos shares.
It will also obtain warrants that will allow Altria to buy more shares at $ 19 per share in four years.
Cronos said he will use capital to accelerate global growth and expansion, as well as research and development. He said the deal with Altria did not limit Cronos to any other partnership.
Gorenstein said Altria has many decades of experience in regulatory, governmental work, compliance, product development and brand management, which we think will lift, especially as new cannabis markets are open all over the world.