Altria to complete acquisition of NJOY e-cigarette business, expected in Q2

Today, on May 28, Altria Group announced that the waiting period related to its previously announced pending acquisition of NJOY Holdings has expired, in accordance with the 1976 Hart-Scott-Rodino Antitrust Improvements Act.

This confirms that no further regulatory review by federal antitrust authorities is required for the transaction. Other customary closing conditions must be met.

Altria expects to complete the acquisition in the second quarter of 2023.

According to Altria, by 2022, the U.S. e-cigarette category included nearly 14 million adult tobacco consumers, including 9.5 million exclusive adult e-cigarette users. This sector generated approximately $7 billion in retail sales in the U.S., accounting for about 15% of estimated equivalent total U.S. tobacco sales and over 50% of estimated equivalent smokeless tobacco sales.

To date, the FDA has approved 23 vapor products and devices for sale. In 2022, NJOY received marketing authorization orders for the NJOY Ace device and several tobacco-flavored pods. The regulatory agency is still reviewing premarket tobacco product applications for several NJOY menthol-flavored e-vapor products.

Altria stated that the transaction has multiple funding sources, including cash from a $2.7 billion agreement with Philip Morris International regarding the IQOS heated tobacco system reached last year.

Prior to the NJOY transaction, Altria announced it would exchange its entire minority stake in struggling JUUL Labs for a non-exclusive global license to certain heated tobacco intellectual property from Juul.

As of the time of writing, NJOY Holdings has received 6 of the 23 marketing orders granted by the FDA for the entire e-cigarette product category, including pods, disposables, and open systems.

Altria's CEO Billy Gifford stated that a major factor in Altria's purchase of NJOY is that the Ace device is not associated with the stigma of youth vaping.

"We believe NJOY has marketed its products responsibly. According to the 2022 National Youth Tobacco Survey, NJOY brand products are not among the commonly used brands by middle and high school e-cigarette users. Additionally, NJOY is developing access restriction technology for its devices to further address the issue of underage use," Gifford explained. "Our consumer research indicates that once consumers try the NJOY Ace, it becomes a competitive product for both smokers and e-cigarette users. After trying the authorized non-menthol Ace variant, 19% of surveyed smokers and 27% of surveyed e-cigarette users indicated they would definitely purchase the product." (Translated by Blue Hole.)