Juul ban could allow Altria to explore e-cigarette options - analysts
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(Reuters) - Juul's U.S. e-cigarette ban could pave the way for Altria (MO), one of its largest investors, to pursue other vaping product makers or go it alone,
Despite regulators highlighting the risks of vaping, analysts say e-cigarettes are key to the nicotine industry's future, with JP Morgan analysts expecting the
Altria (MO), like other tobacco majors, has therefore been investing in smokeless options, including snus and snuff, amid a broader crackdown on the use of cigarettes due to health risks.
Under a 2018 deal which gave Altria (MO) a 35% stake in Juul, the maker of Marlboro cigarettes in
However, analysts said Altria's (MO) obligations are voided if the value of its stake in Juul falls by more than 90% from the time at which it bought into the once high-flying firm.
The valuation of privately owned Juul has since plummeted, with its value on Altria's (MO) balance sheet shrinking 87% to
Altria's (MO) shares have lost about 7%, or nearly
The regulator on Thursday said Juul's applications "lacked sufficient evidence" to show that sale of the products would be appropriate for public health.
"With the elimination of the non-compete, Altria (MO) could pursue M&A in e-vapor, or organic product development," Cowen analyst
In response to the FDA's ban on its e-cigarette, Juul said it was looking to get a stay and also appeal the decision, which analysts have said would help it to keep its products on the market.
Bernstein analyst
Altria (MO) and Juul did not respond to requests for comment.
Before Njoy, British American Tobacco's (BTI) Vuse Solo e-cigarettes and tobacco-flavored pods had become the first-ever vapor products to receive clearance from the health regulator in October last year.
"(The FDA) decision points toward the need for Altria (MO) to accelerate its investments in alternative nicotine-delivery systems sooner rather than later," Edward Jones analyst
(Reporting by