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Altria slashes value of its Juul stake by $4.5 billion amid vaping concerns

Juul suspends fruit-flavored products
  • Altria said it will lower the value of its 35% stake in Juul by $4.5 billion. 
  • In explaining the writedown, the tobacco giant cited the risk that the FDA will ban flavored vaping products.
  • Altria bought its stake in Juul less than a year ago for almost $13 billion.

Tobacco giant Altria said Thursday that is lowering the value of its 35% stake in Juul Labs by $4.5 billion, a move that comes amid growing health concerns about vaping. 

In a regulatory filing, Altria cited the growing risk that the U.S. Food and Drug Administration would ban flavored vaping products, although it said there was "no single determinative event or factor" in the decision to cut Juul's valuation. It also pointed to "various e-vapor bans put in place by certain cities and states in the U.S. and in certain international markets, and other factors."

The move comes less than a year after Altria bet big on Juul when it spent almost $13 billion to buy its stake. That purchase preceded reports of hundreds of people falling ill with respiratory illnesses, as well as at least 19 deaths linked to vaping. As a result of rising health concerns, a number of communities and states have banned or limited vaping use and sales of vaping products. 

Juul accused of selling 1 million tainted vaping pods

The writedown is a swift turnabout for Altria's investment in Juul. At the time of the purchase, Altria described the stake as nothing less than a move "to prepare for a future where adult smokers overwhelmingly choose non-combustible products over cigarettes."

Traditional cigarette usage in the U.S. tumbled to 14% of American adults in 2017 (the latest year for which figures were available), down from nearly 21% in 2005, according to the Centers for Disease Control and Prevention.

Juul had revenue of about $2 billion last year and controlled 72% of the vaping market. At the time of its investment, Altria's 35% stake in Juul valued the San Francisco-based startup at more than $35 billion, making it one of the most valuable private companies in the world.

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