Altria, the company that owns Philip Morris USA, Nat Sherman, and several other cigarette companies, is looking to diversify into marijuana with the possible purchase of Canadian cannabis producer Cronos Group, according to a Reuters report.
Sources familiar with the matter told Reuters that although a deal between Marlboro’s parent company and Cronos is rumored to be weeks away, the marijuana company’s stock jumped 23% to $11.32, giving it a $2 billion-plus market value, after Reuters wrote about the possible acquisition Monday afternoon.
Cronos re-opens, soars more than 18% after Reuters reports Altria is in talks to buy the company https://t.co/GTOhIIXgHV pic.twitter.com/aMJ9kzjfUt
— CNBC Now (@CNBCnow) December 3, 2018
This may not be the first Canadian cannabis producer the company has eyed. In October, the Globe and Mail reported that Altria expressed interested in buying a minority stake in Ontario-based marijuana producer Alphria “with the intention of eventually holding a majority of the company’s shares.”
While Cronos’ stock soared Monday, Bloomberg reports that Alphria’s dipped 23 percent after short seller Gabriel Grego, founder of Quintessential Capital Management, called it a “black hole,” accusing the company of diverting funds to inflate insider investments. Alphria denied these claims as “misrepresentations and distortions,” calling them a “malicious and self-serving attempt to profit by manipulating Aphria’s stock price at the expense of Aphria’s shareholders.”
Alphria did not immediately respond to comment about Grego’s statement or if it was still in talks with Altia.
Although cannabis is legal in Canada—in fact, retailers almost ran out of stock after its October legalization—it is only legal 33 states in the U.S.
Altria is also reportedly in talks to buy a significant majority stock in e-cigarette giant Juul Labs, a San Francisco-based start-up that reached a $15 billion valuation last month.