Altria Group To Take 45% Stake in Cronos Group

Altria Group, a well known name in the cigarette arena who makes Marlboro cigarettes, is taking a stake in the cannabis sector.

The tobacco company announced that it is taking a 45% stake in Canadian medical and recreational marijuana company Cronos Group, with a $2.4 billion buy-in.

Altria will also be paying an additional $1.4 billion for warrants that if exercises will give the company a 55% stake in Cronos.

While this doesn’t beat the whopping $4 billion investment that Constellation Brands invested into Canopy Growth, another marijuana company, its still very high.

Shares of Cronos were soaring on the news, moving up 31% to an almost all-time high at the oepning bell in Friday’s trading session.

“Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria,” said Howard Willard, Altria’s Chairman and Chief Executive Officer. “We believe that Cronos Group’s excellent management team has built capabilities necessary to compete globally, and we look forward to helping Cronos Group realize its significant growth potential.”

“Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth,” said Mike Gorenstein, Cronos Group’s Chairman, President and Chief Executive Officer. “The proceeds from Altria’s investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers. Importantly, Altria shares our vision of driving long-term value through innovation, and we look forward to continuing to differentiate Cronos Group in this area.”

Disclaimer: We have no position in Altria Group Inc. NYSE: MO) nor Cronos Group Inc. (NASDAQ: CRON) and have not been compensated for this article.