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Altria Group to Acquire E-Cigarette Business for $110 Million

By Justin Loiseau – Feb 3, 2014 at 11:20AM

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Altria buying Green Smoke, which has had products on the market since 2009.

Altria Group (MO -0.62%) announced today that it will acquire the e-vapor business of Green Smoke Inc. and its affiliates for $110 million in cash, plus a potential $20 million extra in incentive payments.

Altria Group was a late starter to electronic cigarette investments, adding its first product, MarkTen, to its Nu Mark subsidiary's portfolio in June 2013. MarkTen is a rechargeable e-cigarette that creates a nicotine vapor for users; it is available in limited areas. [Follow this link to a recent article by Fool Leo Sun on "3 Things You Must Know About E-Cigarettes."]

"Nu Mark's entry into the e-vapor category with its MarkTen product was an important development in Altria's innovation strategy," said Altria Chairman and CEO Marty Barrington in a statement today. "Adding Green Smoke's significant e-vapor expertise and experience, along with its supply chain, product lines and customer service, will complement Nu Mark's capabilities and enhance its competitive position. Further, Green Smoke's culture of innovation and history of producing high-quality products are consistent with Altria's culture."

Green Smoke's products have been on the market since 2009 and recorded $40 million in sales for 2013, according to Altria. It has operations in the U.S. and Israel. The company offers rechargeable and disposable versions, and its website touts more than 21,250,000 products sold, allowing 3.5 million e-cigarette users to "feel great about what you smoke."

The deal is expected to be sealed in the second quarter of this year.

Justin Loiseau has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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