Altria Group is in talks to buy NJOY, which is the only independent vaping company with FDA-authorized devices. The discussions are “advanced,” and if the purchase takes place, Altria would also divest its 35 percent share in Juul Labs. The story was first reported by the Wall Street Journal.
Altria is the manufacturer of Marlboro cigarettes, and has no presence in the vaping market aside from its share in Juul. If Altria were to buy NJOY, there would be no FDA-authorized vaping products not owned by a major tobacco company. (Vuse is owned by R.J. Reynolds/British American Tobacco, and Logic is owned by Japan Tobacco International.)
NJOY hired financial experts last year to advise the company on a potential sale. At that time, the company believed it would be valued at $5 billion in a sale, but the Journal says the current discussions involve a starting point of $2.75 billion.
NJOY is attractive to buyers because it has two vaping devices already authorized by the FDA—the disposable NJOY Daily, and the pod-based NJOY Ace. The Ace is the only modern, pod-based vape authorized by the FDA, and is probably capable of competing with Juul Labs’ JUUL and the Vuse Alto if NJOY gains the financial clout to increase production and expand its distribution.
Sad to hear, NJOY is an important independent competitor to the traditional tobacco industry. Aggressive regulation leads to fewer e-cigarette companies, and more ability for the tobacco industry to pick these off one at a time to slow development and protect cigarette profits.
— Michael F. Pesko 🇺🇦 (@mikepesko) February 27, 2023
NJOY currently has only about three percent of the convenience store/gas station segment of the vaping market. But Altria—the nation’s largest cigarette manufacturer—has vast distribution resources and the cash to make production challenges disappear.
Altria currently owns 35 percent of Juul Labs, which it bought in 2018 for $12.8 billion—valuing the company at $38 billion. Last September, Altria exercised its right to exit a non-compete agreement with Juul Labs when Juul’s value dropped below 10 percent of its original mark. Altria now says Juul’s value is $714 million, according to the Wall Street Journal.
If Altria buys NJOY—or if it bought another vape company or began producing its own e-cigarettes—it would likely be forced to divest its share in Juul to satisfy antitrust concerns. (Altria and Juul have already been charged with anti-competitive practices by the Federal Trade Commission in a case currently being appealed by the FTC.)
NJOY, Inc. was founded in Arizona by attorney Mark Weiss, and began selling first-generation e-cigarettes in 2007. After the FDA labeled e-cigarettes unapproved drug/delivery devices and began seizing products arriving from China, Weiss and other manufacturers fought the agency in court, eventually winning in 2010 and keeping the fledgling industry alive.
NJOY, Inc. filed for bankruptcy in 2016, and the company emerged from restructuring as NJOY LLC, majority-owned by hedge fund Mudrick Capital Management, which has operated NJOY since.