Altria terminates non-compete agreement with Juul Labs
According to the Wall Street Journal, Altria Group has terminated its non-compete agreement with Juul Labs due to the potential ban of the e-cigarette manufacturer's products in the United States.
According to documents submitted to the US Securities and Exchange Commission, Altria has permanently ended its non-compete obligation with Juul Labs, forfeiting its board appointment rights and significantly reducing its voting power. An Altria spokesperson told The Wall Street Journal, "We believe that terminating this obligation maximizes our flexibility to compete in the e-cigarette category while maintaining our economic interest in Juul.
Four years ago, tobacco giant Altria paid nearly $13 billion to acquire a 35% stake in Juul Labs, which was then a dominant player in the electronic cigarette market. Since then, Juul's market value has tanked due to scrutiny and lawsuits over its marketing practices. In early September, Juul agreed to pay nearly $440 million to settle a two-year investigation by 33 US states into its marketing of electronic cigarettes, which critics say has fueled a surge in teenagers using e-cigarettes. On June 23rd, the US Food and Drug Administration (FDA) ordered Juul to remove its electronic cigarettes from US store shelves, stating that the e-cigarette manufacturer had not provided sufficient evidence to show they "protect public health." However, a federal appeals court later approved an emergency stay of the order to give judges time to evaluate Juul's appeal.
In July of this year, tobacco giant Altria valued its stake in Juul at $450 million, which fell below the threshold for exiting a non-compete agreement and introducing their own e-cigarette products to the market. Altria CEO Billy Gifford stated at the time that the company was now free to explore the acquisition of other e-cigarette brands.
Ending its non-compete agreement with Juul, allows Altria to act independently or pursue other vaping companies such as Njoy, which has received marketing authorization from the U.S. Food and Drug Administration (FDA) for several of its products. In July of this year, The Wall Street Journal reported that Njoy had hired bankers to explore a possible sale of the company.
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