Altria/NJOY Deal Rationale
Altria recently agreed to acquire NJOY for up to $3.25B, with PWP and Moelis doing the heavy lifting on advising Altria and NJOY, respectively. It seems like a way overpriced move for Altria to be paying such an amount for a company with only 3% of the US vape market share, even if NJOY's trump card is that they have FDA approval for their products which the No. 1 and 2 market leaders in the US are struggling with. Considering that Altria has an IP-sharing agreement with Juul, why don't they just develop an in-house product rather than spend such a premium acquiring NJOY, especially after the whole Juul fiasco? Would love to hear some more discussion about this.
In the C&R space but not an alcohol & tobacco banker so could be wrong, but it seems like the major roadblock in the vaping space is FDA approval - the feds have been super slow with approving vaping products, and NJOY has the only pod-based vape that's FDA authorized, so Altria likely saw the acquisition as more of an IP acquisition that allows them to skip the roadblocks they'd face with developing their own technology. The 3% market share isn't probably too concerning for Altria, given their brand image and marketing power as one of the tobacco giants.
Also anyone know which specific bankers were working on the deal?
James Wappler was definitely the lead man on PWP's side, he's been Altria's go-to advisor for some time now. Moelis's team was a mixture between the C&R teams and the RX teams (Moelis RX worked with Njoy a while back when they were restructuring).
Benoit Renon was one of the seniors spearheading things on Njoy's side.
Believe Ibrahim was also on the deal.
Interesting. Doesn't Renon sit out of the London office?
This was my exact thought as well. If Altria can understand why NJOY received FDA approval, then they can leverage that knowledge to modify JUUL products to gain the same approval. JUUL + NJOY (assuming JUUL receives FDA approval) accounts for far greater than 3% of the TAM
Altria sold their stake in Juul though. They still have an IP-sharing agreement with Juul but no longer have a stake in Juul.
Great returns for Mudrick. Bought a 51% at $40m valuation in 2017. IRR of 80% if you forget the sales of parts of the stake over time. (2.75/2/0.04)^(1/6)-1
40 million or 400? Your IRR calc is way off for 40.
Good catch lol
Is that not a CAGR calculation?
Def a conservative play after Juul blowing up. Njoy was really the only potential acquisition target with an FDA-approved product and Altria decided they’d rather be safe and go with a certainty rather than risk it again.
Why not just try to acquire the rest of JUUL at a discount? Even though they're stuck in regulatory hurdles they're still the market leader in the US.
Probably because the concerns over the litigation that Juul's still facing. Also on the inside Altria probably thought FDA approval for Juul was still a ways off.
Any vapers actually tried Njoy's vapes before? I've personally never really noticed Njoy's products on the shelves.
Hot take but the Juul investment wasn't as bad as it seems. Most importantly, with the Juul investment Altria ensured the next generation's market for nicotine. In the US, Juul's made e-cigarettes as iconic and commonplace among the younger generation as Marlboro Reds were to older smokers. The way I see it, Altria paid $12B to secure an entire generation of future smokers.
That's certainly an interesting way of looking at it. On the other hand, I don't think Altria necessarily wanted to spend $12B to create that market only to get leapfrogged by PM as Juul went down the gutter.
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