Boston, MA 04/10/2014 (wallstreetpr) – Altria Group Inc (NYSE:MO), a manufacturer and marketer of cigarettes and smokeless products, announced the acquisition of Green Smoke Inc. The transaction was at $110 million in cash consideration and about $20 million incentive payment. Green Smoke is maker and marketer of electronic cigarettes. The company sells disposable and rechargeable e-cigarettes. It serves the U.S. and Israel markets.
Altria termed the acquisition strategic to its business. The company plans to retain the key management of Green Smoke following the acquisition. In doing that, Altria seeks to benefit from the expertise, experience and strong customer service practice that exist in Green Smoke. Retaining the key management of Green Smoke is also expected to help Altria gain quick penetration into the electronic cigarette market category where Green Smoke already thrives.
Electronic cigarette buzz
As electronic cigarettes gain popularity among smokers, especially young ones, many conventional tobacco cigarette manufacturers are turning focus to the market. Altria Group Inc (NYSE:MO) already boasts a significant presence in e-cigarette category; the company owns the MarkTen brand which is a rechargeable and disposable e-cigarette. The product launched in Indiana in August 2013. By adding Green Smoke, Altria obviously wants more in the electronic cigarette category.
E-cigarettes are battery-powered devices which simulate conventional tobacco cigarettes, but deliver small doses of nicotine vapor. They are believed to be safer than the actual cigarettes which produce smoke, mostly laced with harmful tobacco chemicals. Nonetheless, e-cigarettes are still marred in controversy. Anti-smoking activists have called on the regulators – the U.S. Food and Drug Administration (FDA) – to impose restrictions on the use of the devices.
Threat of extinction
As governments around the world continue to tight regulations around the use of tobacco cigarettes and more becoming more concerned about the health risks of tobacco smoking, tobacco biggies like Altria Group Inc (NYSE:MO) have been facing declining business fortunes. In this situation, e-cigarettes seem to have come handy to rescue an industry that is facing the threat of extinction.
