RICHMOND, Va .– ( BUSINESS WIRE ) – Altria Group, Inc. (Altria) (NYSE: MO) today announced it has
signed an agreement for the acquisition of newly issued shares in the Cronos Group
Inc. (Cronos Group) (TSX: CRON and NASDAQ: CRON), a global leader
cannabinoid company, based in Toronto, Canada. The transaction
represents a 45% stake in the Cronos Group, at a price of CAD $ 16.25
per share, for a total investment of Altria of approximately USD
$ 1.8 billion (about CAD $ 2.4 billion). 1
As part of the agreement, at the close, Altria will have the right to
appoint four directors, including an independent director, to serve
The Board of Directors of the Cronos Group, which will be extended from five to
seven directors. The agreement includes a mandate to acquire a
additional shares in Cronos Group for CAD $ 19.00
per share exercisable in four years from the closing date. Self
exercised in full, the mandate would increase the ownership of Altria in
Cronos Group of 10% to about 55%.
"Investing in Cronos Group as our exclusive partner in the emerging sector
the global cannabis category represents an exciting new growth opportunity
for Altria, "said Howard Willard, Chairman and Chief Executive of Altria
Officer. "We believe that the excellent management team of Cronos Group has
skills built necessary to compete globally, and we do not see the hour
to help the Cronos Group to realize its significant growth potential ".
"Altria is the ideal partner for Cronos Group, providing the resources
and expertise we need to significantly accelerate our strategic growth "
said Mike Gorenstein, president, president and head of the Cronos group
Executive officer. "The proceeds from the investment of Altria will allow us to do so
to expand our global infrastructure and distribution more quickly
footprint, while increasing investment in R & D and brands
resonate with our consumers. It is important to stress that Altria shares our vision of
driving long-term value through innovation, and we do not see the hour
continue to differentiate the Cronos group in this sector ".
This investment positions Altria to participate in the global emerging market
cannabis sector, which believes it is ready for rapid growth compared to
next decade. It also creates a new growth opportunity in an adjacent one
category complementary to the core activities of Altria tobacco.
Altria expects that its investment will help the Cronos group to accelerate its growth
strategies and its development in R & D and intellectual property.
In addition, Altria will provide expertise to help Crono Group grow
in the growing global cannabis market. These services can include
regulatory affairs, regulatory science, compliance, government affairs
and brand management.
About Cronos Group
Cronos Group is a globally diversified and vertically integrated company
cannabis company with a presence in all five continents. Cronos Group
manages two Canadian producers of 100% ownership: Peace Naturals
Project Inc., which received the first non-incumbent medical cannabis
license granted by Health Canada and Original BC Ltd., which is based
in the Okanagan Valley, in British Columbia. The Cronos group operates a
portfolio of brands that includes Peace Naturals a global
brand of medicines and two Canadian recreational brands for adult use, COVE ™
and Spinach ™ . The Cronos group has multiple
international production and distribution platforms out of five
Cronos Group is creating an infrastructure to create an efficient one
Global production footprint and diversified global sales e
Distribution network. Cronos Group is focused on creation and monetization
disruptive intellectual property and growth of an iconic portfolio
brands that resonate with consumers. The Cronos group is committed to
build a business leader in the industry that transforms the perception of
cannabis and responsibly elevates the consumer experience.
Cronos Group has no operations in the United States and cannabis remains illegal at
federal level. Through Cronos Group, Altria is best positioned should
cannabis becomes authorized by the federation
According to the terms of the agreement, at the close Altria will pay CAD $ 16.25
per share of the Cronos Group's shares issued in the transaction, or 41.5%
premium at the weighted average price for the 10-day CAD volume $ 11.48 up
TSX starting November 30th, the last trading day not affected before when
Cronos Group announced that it was in preliminary discussions with Altria
regarding a possible investment in Cronos Group. The transaction will be
result in a total investment by Altria at the close of
approximately $ 1.8 billion in cash (about $ 2.4 billion CAD). 1
Altria will receive shares representing a 45% stake in Cronos Group.
The agreement also includes a mandate to acquire an additional property
interest in Cronos Group at a price of $ 19.00 CAD per share exercisable
in the next four years. If exercised in full, the mandate would do it
increase the ownership of Altria in the Cronos group by 10% to 55%. L & # 39; aggregate
the strike price for the warrant is approximately USD $ 1.0
billions (about CAD $ 1.4 billion), 1 subject to
The transaction is subject to customary closing conditions, including
Approval of the shareholders of the Cronos Group and receipt of regulatory approvals,
that will be pursued promptly. The transaction should close
the first half of 2019. At the close, the Cronos Group will remain Canadian
listed company based in Toronto, Canada and continues to
be guided by his current management team.
A copy of the contract containing the terms of the transaction will be
filed with the Securities and Exchange Commission (SEC) and the Canadian
Lenders and consultants
Altria has received committed loans totaling about $ 2.4 CAD
billions from JPMorgan Chase Bank, N.A. Altria could consider the research
permanent financing in the future.
Perella Weinberg Partners LP is Altria's financial advisor.
Wachtell, Lipton, Rosen & Katz and Goodmans LLP provide legal assistance
I recommend Altria for the deal. Supply of Hunton Andrews Kurth LLP
Altria's legal adviser on the financing.
Lazard Ltd. is the financial advisor of Cronos Group. Sullivan &
Cromwell LLP and Blake, Cassels & Graydon, LLP provide legal advice
I recommend Cronos Group for the deal.
Profile of Altria
Altria wholly owned subsidiaries include Philip Morris USA Inc. (PM
USA), USA Smokeless Tobacco Company LLC (USSTC), John Middleton Co.
(Middleton), Sherman Group Holdings, LLC and its subsidiaries (Nat
Sherman), Nu Mark LLC (Nu Mark), Ste. Michelle Wine Estates Ltd. (Ste.
Michelle) and Philip Morris Capital Corporation (PMCC). Altria holds a
participation in Anheuser-Busch InBev SA / NV (AB InBev).
The brand portfolios of Altria's tobacco companies include Marlboro ® ,
Black & Mild ® Copenhagen ® ,
Skoal ® VERVE ® MarkTen ®
and Green Smoke ® . Ste. Michelle produces
and markets premium wines sold under various labels, including Chateau
Ste. Michelle ® Columbia Crest ® ,
14 hands ® and Stag & # 39; s Leap Wine Cellars ™ ,
and imports and markets Antinori ® Champagne
Nicolas Feuillatte ™ Torres ®
and Villa Maria Estate ™ products in
the United States. Trademarks and service marks relating to Altria
Referenced in this version are owned by Altria or his
subsidiaries or are used with permission.
More information on Altria is available on altria.com and on
Altria Investor app or follow us on Twitter, Facebook and LinkedIn.
Forward-looking and precautionary statements
This version contains projections of future results and more
forward-looking statements involving a number of risks e
uncertainties and are made in accordance with the Safe Harbor provisions of the
Law on the reform of private litigation of securities in 1995.
Important factors that could cause different actual results and results
materially from those contained in such forward-looking statements
include, without limitation, the ability of the parties to consume the
transaction as expected; the possibility that one or more gods
the conditions for completing the transaction may not be met;
the possibility that the regulatory or shareholder approvals required for
the transaction can not be obtained in a timely manner, if at all; the
ability of the parties to meet expectations regarding timing, completion,
and other issues related to the transaction; and any event that could
give rise to the resolution of the agreement between Altria and Cronos
Group. Other important factors include the possibility that it is expected
the benefits of the transaction may not materialize as intended
or period of time, if applicable; the potential inaccuracy of the financial
projections; prevailing economic, market or commercial conditions
negatively affect the parts; risks related to the financing of
transaction, including the risk that Altria will not be able to protect
permanent financing of the transaction on favorable terms, where appropriate,
and the risk of a downgrade in Altria credit ratings; risks that the
the transaction interrupts the current plans and operations of the Cronos Group; the
fact that Altria reported gains and financial position and any
the dividends paid by the Cronos Group on the shares held by Altria may be
negatively impacted by unfavorable currency exchange rates, taxes
and other factors, including the risks encountered by the Cronos Group in
his activity; risks related to the interruption of the transaction a
Altria, Cronos Group and their respective direction; risks related to
the effect of the announcement of the transaction on the skills of the Cronos Group
to maintain and recruit key personnel and maintain relationships with
customers, suppliers and other third parties; and the other factors
detailed in public documents filed by the parties, including those of Altria
respective annual report on the 10-K form for the year ended December 31,
2017 and its quarterly report on the 10-Q form for the period ended
September 30, 2018 and the Cronos Group documentation with the Canadian
Securities Administration and United States Securities Exchange
Commission, including its annual information form dated 27 April 2018.
1 Based on the exchange rate reference of 0.747 USD / CAD to
market closed on December 6, as quoted by Bloomberg