Juul in Talks with PMI/JT/Altria

Juul Labs Inc is reportedly in early talks separately with Philip Morris International, Japan Tobacco, and Altria Group for a potential sale, strategic investment, licensing, or distribution deal, said the Wall Street Journal (WSJ).

Sources close to the matter told WSJ a deal is not imminent and the discussions may not result in a sale or partnership.

Last fall, Juul and Altria engaged in late-stage negotiations regarding the sale of Juul's international operations or to license its US intellectual property. The negotiations broke down in September over a potential bankruptcy filing, and Altria also exercised the option to be released from its non-compete agreement, almost four years after purchasing a 35% stake in Juul. The e-cigarette manufacturer obtained funding in November from a few of its original investors to stay in business and discussions with Altria have now resumed.

Juul may be an attractive acquisition target since, according to Nielsen estimates, it accounts for 27% of e-cigarettes sold in US retail establishments. However, the company has been facing regulatory and legal challenges. In December 2022, Juul agreed to pay a US$1.7 billion settlement to resolve over 5,000 lawsuits that had been filed by over 10,000 individuals, municipalities, school districts and American Indian tribes. This followed an earlier US$400 million settlement to resolve lawsuits by 33 states.

In June 2022 the US Food and Drug Administration (FDA) banned Juul devices, but FDA's ruling was temporarily stayed by a federal appeals court, allowing Juul to keep selling its products during the appeal process. Since the matter is still unresolved, there is a great deal of uncertainty over the company's future prospects. In the event that FDA decides to permanently prohibit Juul's sales in the US, the company may apply for FDA approval for its more recent products, which are currently available in international markets.