According to a press release from Altria, the company has notified Cronos Group that it has irrevocably relinquished its options to purchase additional common shares of Cronos, as well as any ownership rights or common shares underlying those options, without any consideration.
In March 2019, Altria, through its subsidiary, acquired a 45% stake and stock warrants in Cronos. The warrants can be exercised before March 8, 2023, at a price of CAD 19 (USD 13.93) per share. Prior to abandoning the warrants, Altria's subsidiary held 156,573,537 common shares of Cronos (approximately 41% of the issued and outstanding common shares), and through full exercise of the warrants, could increase its ownership to 240,816,760 common shares of Cronos (approximately 52% of the issued and outstanding common shares after full exercise of the warrants).
On December 15th, 2022, the closing price for Cronos common shares was $3.81 CAD ($2.79 USD), and for the past 12 months, the trading price for Cronos common shares has not exceeded $6 CAD ($4.39 USD). Considering Cronos' trading level and the expiration of its warrants in March 2023, on December 16th, 2022, Altria decided to forfeit its warrants. As a result of forfeiting the warrants, Altria expects to claim a capital loss of $483 million USD in its 2022 federal merger asset tax return. Altria will continue to hold 156,573,537 shares of Cronos common stock.
Tobacco company Altria holds common stock in Cronos through its subsidiary for investment purposes. Altria will continue to assess Cronos' business and prospects, as well as all other relevant factors, to determine whether it or its affiliates will dispose of such shares on the open market through private negotiation transactions (possibly involving Cronos or third parties) or through other means.
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