October 31, 2019 / 3:24 PM / 21 days ago

FTC probes Altria for role in Juul executive changes

FILE PHOTO: Federal Trade Commission seal is seen at a news conference at FTC headquarters in Washington, U.S., July 24, 2019. REUTERS/Yuri Gripas/File Photo

WASHINGTON (Reuters) - U.S. antitrust enforcers are probing Altria Group Inc (MO.N) for potentially exerting influence over electronic-cigarette maker Juul Labs Inc before winning approval for a big share buy, Altria said in a government filing on Thursday.

Marlboro maker Altria purchased a 35% stake in Juul in December 2018 for $12.8 billion, but the shares are non-voting and the companies have not yet received antitrust approval for the transaction.

Prior to antitrust approval, it is illegal for companies involved in mergers or similar transactions to coordinate in many areas.

Juul said in September it was replacing Chief Executive Officer Kevin Burns with K.C. Crosthwaite, a Philip Morris USA veteran and most recently the chief strategy and growth officer of Altria. It later hired Joe Murillo, a former head of regulatory affairs at Altria, to take a similar role at Juul.

Altria said in the filing that the Federal Trade Commission, which works with the Justice Department to enforce antitrust law, had sent it a civil investigative demand, similar to a subpoena.

Investigators were “seeking information regarding, among other things, Altria’s role in the resignation of JUUL’s former chief executive officer and the hiring by JUUL of any current or former Altria director, executive or employee,” the filing said.

Altria also said both it and Juul had certified it answered most of the FTC questions about the investment, and as of Wednesday there was an agreement the FTC would reach a decision on the investment within 70 days.

With the Juul deal, Altria has set its sights on re-entering the market for vaping in the face of declining smoking rates and cigarette sales in the United States. It discontinued its vape products in December 2018.

But health concerns, such as 37 vaping-related deaths, coupled with an increased political backlash and regulatory bans following a surge in teenage vaping have clouded Juul’s future. Its valuation has shrunk by more than a third to roughly $24 billion since Altria bought its stake in December.

Reporting by Diane Bartz and Anuron Kumar Mitra; Editing by Tom Brown

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below