What's going on?

Tobacco giant Altria announced its biggest-ever investment on Thursday � spending $12.8 billion to acquire a 35% stake in leading e-cigarette maker Juul.

What does this mean?

Despite launching a mere three years ago, Juul already generates annual revenue in excess of $1 billion. Fundraising just this summer valued the company at $16 billion; but Altria�s investment puts it at $38 billion, making Juul one of the most valuable companies in the world not listed on a stock market� yet (tweet this).


For Juul, the deal opens up access to Altria�s growth-boosting infrastructure. Juul�s e-cigs (but not its flavored liquid pods) will sit next to Altria brands in thousands of stores, and the teen spirit will have access to the Marlboro man�s extensive sales and marketing operations. Juul also made Altria promise not to grow its stake any bigger � or sell it for six years after the deal.

Why should I care?

For markets: Big Tobacco�s big switch.

With more people switching from regular smoking to e-cigarettes, especially youngsters with many years of puffing ahead, Big Tobacco�s understandably keen to get with the times. Some investors, however, think that Altria is paying (and borrowing) too much for its toke on Juul, especially given the drag of US authorities cracking down on the vaping �epidemic� among teens.

The bigger picture: The older guys are trying to stay cool.

Juul marks Altria�s second new-age investment this month: it recently spent $1.8 billion on 45% of Canadian-listed cannabis company Cronos. And big brewer AB InBev � 10% of which is owned by none other than Altria � announced a $100 million joint venture with Cronos competitor Tilray on Wednesday to explore making cannabis-infused beverages. If you�re curious about why weed companies are so high on investors� shopping lists, check out our dank guide to the sector.