Marlboro’s Altria Group is ready to move on from tobacco
According to a report by Reuters from yesterday, Marlboro manufacturer Altria Group Inc. could be preparing to transition away from tobacco and into marijuana. The company is reportedly in negotiations with Cronos Group Inc. to buy the Canada-based marijuana producer.
The discussions are only in the preliminary stage. Cronos has not agreed to make a deal and the negotiations could take several weeks to find a resolution. Reuters tried to get an official response from both Altria and Cronos, but neither company was willing to discuss the matter.
If Altria acquires Cronos, it would be the first time a tobacco company has entered the marijuana industry and would set Altria up with a substantial footprint. Cronos is currently the fourth-largest cannabis company in the Canada market by market valuation.
As is the case with virtually all cigarette manufacturers, Altria has seen a steady decline in tobacco sales that doesn’t seem to be letting up. It’s only logical that the company would look to find a suitable alternative and cannabis definitely fits the criteria.
Cronos has a market valuation of US$1.36 billion. When news broke of the possible deal, the company’s stock price shot up 30% on Wall Street, but then settled to only produce an 11.15% increase by the time the markets closed. Altria, who has seen its stock fall 20% this year, closed 1.64% higher as a result of the news.