澎湃News trainee reporter Zhang Wei Comprehensive report
On December 20, 2018, US tobacco giant Altria Group (NYSE:MO) spent $12.8 billion to acquire a 35% stake in JUUL Labs, an e-cigarette startup that raised the valuation of JUUL Labs to $38 billion. As part of the agreement, 1,500 employees at JUUL Labs can receive $2 billion in prize money from the Altria Group, averaging approximately $1.3 million per person. This bonus will be paid in the form of a special dividend. It is reported that this remittance has been transferred to the JUUL Labs account and will be distributed to employees.
According to a person familiar with the matter, the exact amount of bonuses for JUUL Labs employees depends on a number of factors, including the time of the company and the number of shares held.
The founders of JUUL Labs —— 43-year-old Adam · Adam Bowen and 38-year-old James · James Monsees became the first e-cigarette billionaires for this acquisition.
According to Bloomberg News, Bowen and Monsa controlled a 5.6% stake in JUUL Labs after a round of financing in July 2018. At that time, the two people held a share of 843 million US dollars per person. According to the Bloomberg Billionaires Index, the two founders currently retain 3.6% of the company's shares, and the shareholding amount reached $1.36 billion per person. The deal with Altria Group has resulted in JUUL Labs' valuation of $38 billion, surpassing SpaceX and Airbnb.
For the deal, Bloomberg analyst Ken Shea analyzed that e-cigarettes are a disruptive technology that shows the direction of consumers. The development of e-cigarettes is so fast that cigarette companies like Altria need to find a way to reduce the use of cigarettes and consider the future of the company.
When Bowen and Monsa studied for a master's degree at Stanford University, they came up with the idea of starting a business and created Ploom in 2007. Eight years later, they sold the company's name to Japan Tobacco and renamed their company Pax Labs. In June of the same year, Pax Labs introduced a U-shaped e-cigarette called JUUL. In 2017, JUUL Labs was separated from PAX Labs as an independent company. After independence, James · Monsa and Adam · Bowen served as the chief product officer and chief technology officer of JUUL Labs and served on the board of directors.
JUUL is currently the most popular e-cigarette product in the United States. It is stylish and looks like a USB flash drive. It has eight flavors including mint, tobacco, mango and caramel pudding, especially for teenagers. As of October 2018, sales of JUUL e-cigarettes accounted for more than 70% of the US e-cigarette market. Since April 2018, JUUL's market share in the United States has increased by 10 percentage points.
Although it is an electronic cigarette, JUUL's nicotine content is not low, and its nicotine content is higher than most electronic cigarette products on the market. Each JUUL cigarette core (JUULpod) has a nicotine content of 5%, which is 59 mg/ml, and each cigarette core can be used for about 200 suctions.
According to Pax Labs' R&D engineers, the original intention of JUUL was not to produce a smoking cessation product. In April 2018, US Food and Drug Administration Commissioner Scott Gottlieb also said that nicotine in JUUL is enough to cause addiction.
JUUL Labs is currently planning to expand the sales market to the world. In May 2018, JUUL began selling in Israel. However, due to public health considerations, Israel banned JUUL sales in August 2018 on the grounds that JUUL's nicotine content was nearly three times higher than Israel's recommended 20 mg/ml.
Another major player in the deal, the Altria Group, is one of the world's largest tobacco producers and the owner of the Marlboro brand, headquartered in Virginia, USA.
Altria was born out of the tobacco giant Philip · Philip Morris. In 2003, in order to cover up the negative impacts associated with the tobacco business and to whitewash the reputation of “healthy killer”, Philip · Morris officially changed its name to Altria Group.
In recent years, Altria’s tobacco sales have been declining. In search of new market growth points, Altria acquired a 45% stake in Canadian cannabis production and distributor Cronos Group (NASDAQ:CRON) for $1.8 billion in early December 2018, the first in the history of the cannabis industry. Two major transactions.