The maker of Marlboro cigarettes is definitely in on the future of marijuana
Only a week ago, it was rumored that the maker of Marlboro cigarettes, Altria, was considering a purchase of marijuana company Cronos Group. The move would make perfect sense, given cigarettes’ fall from grace, but the talk was said to be just rumors, nothing else. It would now appear that the rumors have been confirmed, as Altria has spent $1.8 billion buying stock in Cronos.
Through the purchase, Altria now owns 45% of Cronos. This is the second time a major company has made a substantial purchase of a marijuana-based company this year. This past August, it was reported that Constellation Brands, which is behind such brands as Corona beer, Svedka Vodka and Ruffino wines, had purchased $4 billion in shares of marijuana grower Canopy Growth. That purchase was the second time Constellation had invested in Canopy following a $191-million investment in the company last year, and now has Constellation owning 38% of the Canadian marijuana firm.
Altria didn’t just buy into Cronos. In sealing the deal, it paid a 33% premium over the company’s closing price as of November 30 and a 42% premium over the 10-day volume average as of the same day. Moving forward, Altria will also have the ability to increase its stake to as much as 55% with another investment of around $1 billion.
Cronos saw its stock price increase on the news and the sudden influx of a huge amount of cash. After trading at $8.58 on December 3, the price rose to $13.50 on December 7 and is still up today, sitting at $12.62 as of this writing.
The same can’t be said for Altria. On December 3, it was trading at $55.78 and, after several days of roller coaster activity, now sits at $53.16.