Altria-owned company

Altria Group Inc. (MO) is a holding company whose main subsidiaries produce tobacco products. The company’s history can be traced back to 1847, when Philip Morris & Co. Ltd., the founder of the iconic Marlboro cigarette brand, was first established. The company was founded in 1919, expanded in the 1930s, 1940s, and 1950s, and by the 1980s had become the leading cigarette manufacturer in the United States. In 1985, Philip Morris was established as a holding company and the parent company of Philip Morris Inc. It was this holding company that later changed its name to Altria Group in 2003, and the company said that the name would better reflect the diversity of its investment portfolio, rather than tobacco. Today, however, tobacco is still the main business of Altria’s subsidiary, and tobacco products account for approximately 98% of the company’s 2020 net income of US$26.2 billion. As of July 12, 2021, Altria’s market value was 87.9 billion U.S. dollars.

In the past, the company has repeatedly tried to get involved in other business areas, especially in the late 20th century, when consumer demand for tobacco in major markets began to decline. Philip Morris acquired a controlling stake in Miller Brewing Co. in 1970 and Seven-Up Co., a soft drink manufacturer, in 1978. Between 1985 and 2000, the company acquired General Foods Corp., Kraft Inc. and Nabisco, all of which became and eventually became Kraft Foods. However, these acquisitions were later divested. Kraft Foods was spun off in 2007. The company later sold Seven-Up and Miller Brewing.

Since these actions, the company has focused on the domestic market after the spin-off of Philip Morris International (PM) in 2008. Philip Morris promoted sales in the domestic tobacco market through partnerships and acquisitions that entered new areas through a series of acquisitions. Potential for rapid growth. For example, after canceling the reunion negotiations, the company and Philip Morris International launched IQOS, a heated tobacco product designed to provide users with the pleasure of nicotine, but with less toxins. IQOS was launched in October 2020, marking Altria’s willingness to innovate in creating new products.

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The company’s series of acquisitions once again show that its focus is shifting from the shrinking cigarette market to related markets. These include buying and selling companies that sell smokeless tobacco, marijuana, e-cigarettes, cigars and nicotine bags. We look at some of these acquisitions in more detail below. Some (but not all) of these companies can get a schedule of revenue and profits.

UST LLC

  • Business Type: Smokeless tobacco manufacturer
  • Purchase price: US$10.4 billion
  • Acquisition date: January 7, 2009 (completed)

UST is a holding company and was first incorporated in 1986. However, one of its main subsidiaries, the American Smokeless Tobacco Company, LLC, can trace its history back to a tobacco shop opened in Pittsburgh in 1822 by George Wayman. UST was acquired by Altria in 2009. The acquisition of the US Smokeless Tobacco Company adds two leading smokeless tobacco brands to the Philip Morris product line: Copenhagen and Skoal. Unlike cigarettes, the use of smokeless tobacco has been increasing since 2000.

The UST acquisition also added wine maker Ste. Michelle Wine Estates Ltd. joins Altria’s investment portfolio. However, on July 9, 2021, Altria announced that it had reached an agreement to sell its wine business to private equity firm Sycamore Partners Management LP for approximately US$1.2 billion. The all-cash transaction is expected to be completed in the second half of 2021. Altria plans to use the proceeds from the sale for additional stock repurchases.

Cronos Group

  • Business Type: Cannabis Producer
  • Purchase price: 1.8 billion US dollars, to obtain 45% of the equity
  • Acquisition date: December 7, 2018 (announced)
  • Annual net income (2020): USD 46.7 million
  • Annual net loss (2020): USD 75.3 million

Cronos Group Inc. (CRON), a Canadian cannabis producer and distributor, was established in 2012. In December 2018, Altria announced that it would acquire $1.8 billion worth of newly issued shares of Cronos to obtain a 45% ownership interest in the company. The agreement also includes a warrant that allows Altria to increase its ownership to 55% in the next four years. Since the transaction, the cannabis stock price has fallen sharply. This acquisition further demonstrates Altria’s intentions to diversify. As of the end of 2020, Altria’s ownership interest in the Kronos Group was 43.5%, which was lower than its initial 45% stake. This was due to the issue of additional shares by Kronos and Altria did not exercise the fixed price The right of first refusal to purchase additional shares at a fixed price. The pre-agreed price.

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Juul Lab

  • Business Type: Electronic Cigarette Company
  • Purchase price: US$12.8 billion, obtaining 35% economic equity
  • Acquisition date: December 20, 2018

Juul Labs Inc., a Silicon Valley startup and e-cigarette manufacturer, was founded in 2015. Altria acquired a 35% stake in Juul in 2018, valuing the company at 38 billion U.S. dollars. This acquisition demonstrates Altria’s shift to a more innovative segment of the tobacco market. However, the acquisition was not smooth. Vaping is a term used to describe the vapors produced by inhaling and exhaling e-cigarettes. Because diseases related to e-cigarettes have caused many deaths and hospitalizations, they are subject to stricter supervision and review by health officials. Due to these health issues, Juul is facing more and more lawsuits due to its marketing practices, as the number of teenagers using e-cigarettes has soared.

In April 2020, the US Federal Trade Commission (FTC) filed a lawsuit against Altria, claiming that the company’s 35% investment in Juul violated antitrust laws. The FTC stated that Altria and Juul conducted illegal incidental transactions, which caused Altria to withdraw its e-cigarettes from the market before investing in Juul, thereby eliminating the source of market competition. The trial will begin on June 2, 2021. If Altria is convicted of violating antitrust laws, the company may be forced to divest its shares in Juul and result in the termination of the non-compete transaction between the two companies.

John middleton co.

  • Type of business: Cigar and pipe tobacco manufacturer
  • Purchase price: US$2.9 billion (announced)
  • Acquisition date: December 11, 2007 (completed)
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The John Middleton Company was originally founded by John Middleton in downtown Philadelphia in 1856 as a small tobacco shop selling cigars and pipe tobacco. A century and a half later, Altria acquired the company from the privately held Bradford Holdings. Today, the John Middleton Company produces large-scale mechanical cigars and pipe tobacco as a wholly-owned subsidiary of Philip Morris America. This acquisition illustrates another way the company has shifted from cigarettes to the growing tobacco market. At the time of the acquisition, Altria stated that between 2003 and 2007, the compound annual growth rate of the machine-made cigar market was 4%.

Burger Söhne Holding AG (“Burger Group”)

  • Business type: Nicotine bag manufacturer
  • Purchase price: US$372 million to acquire 80% of the shares (announced)
  • Acquisition date: June 3, 2019 (announced)

Burger Söhne Holding AG is headquartered in Switzerland and was founded in 1864. Last year, Altria acquired 80% of the Hamburg Group’s shares and established a subsidiary named Helix Innovations LLC, as the parent company of the Hamburg Group’s subsidiary, engaged in the production of flavored nicotine bags bearing the brand name exist!. product It is a small pouch that the user puts in his mouth to experience nicotine stimulation without chewing, spitting and tobacco odors caused by chewing tobacco.

Altria Group Diversity and Inclusive Transparency

As part of our efforts to raise awareness of the importance of company diversity, we emphasized the transparency of Altria Group’s commitment to diversity, inclusiveness and social responsibility. The figure below illustrates how Altria Group reports on the diversity of its management and workforce. This indicates whether Altria Group disclosed data on the diversity of its board of directors, top management, general management and employees in various indicators. We have used ✔ for transparency.

Altria Group Diversity and Inclusion Report
Race gender ability Veteran status Sexual orientation
Board of Directors
Top management
Integrated management ✔ (U.S. only) ✔ (U.S. only)
employee

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