Altria has taken a $4.1 billion writedown on its investment in Juul Labs pursuing greater regulatory scrutiny and a backlash from vaping. Altria, the maker of Marlboro, Virginia Slims, and Parliament cigarettes, said the impairment was thanks to the growing number of legal cases from Juul and the expectation that far more will be coming.
The corporations also revised the terms of Altria’s minority investment in Juul.
“Altria has not built any assumptions, or drawn any conclusions, with regards to the merits or likelihood of achievement of any of these cases, litigation is subject to uncertainty and it is achievable that there could be adverse developments in pending or long term cases,” the business reported in a assertion. Altria reported the number of cases pending from Juul has developed far more than eighty% considering that October 31, 2019.
Under the terms of the new investment settlement, Altria reported it would quit offering companies, which includes logistics, distribution, and accessibility to retail shelf area to Juul, and as a substitute help with regulatory affairs.
Altria paid out $12.eight billion for a 35% stake in Juul in December 2018. It recorded $eight.6 billion in non-hard cash pre-tax impairment charges in total to the Juul investment in 2019.
Under the terms of the new investment settlement, Altria reported it would quit offering companies, which includes logistics, distribution, and accessibility to retail shelf area to Juul, and as a substitute help with regulatory affairs. Two directors designated by Altria will sign up for the Juul board pursuing completion of an antitrust probe.
Altria reported it expects a resolution of the antitrust clearance in the first 50 % of this year.
“This settlement is a continuation of the reset initiated by JUUL’s management staff,” Altria chief executive officer Howard Willard reported in a assertion.
Altria stock fell as a lot as 7% Thursday early morning.
Altria reported a reduction of $1.eighty one billion for the fourth quarter, down from internet revenue of $1.twenty five billion for the fourth quarter very last year. The business experienced product sales of $4.eight billion. It revised its lengthy-expression earnings per share growth targets for 2020 to 4% to 7%, down from five% to eight%.