Juul Labs Inc. is looking for a new partner.
The e-cigarette maker, which came close to filing for bankruptcy protection last fall, is now in early stages of talks with three tobacco giants, according to people familiar with the matter. Juul is looking for a potential sale, strategic-investment, licensing or distribution deal, the people said.
The people said that Juul executives had had separate discussions with Philip Morris International Inc., Japan Tobacco Group and Altria Group Inc. in recent weeks. The people said that a deal isn't imminent and the discussions could not result in a sale or partnership. Altria, which owns a 35% stake in Juul, valued the vaping company at $1 billion in October.
Juul, which represents 27% of the e-cigarettes sold in U.S. stores tracked by Nielsen last year, reached the brink of bankruptcy last year because of a dispute with the federal regulators over whether its products could remain on the U.S. market. The still-unresolved dispute made it hard for Juul to raise money to cover its legal liabilities.
Juul agreed in December to pay $1.7 billion in a broad legal settlement covering more than 5,000 lawsuits. Many of the lawsuits accused the e-cigarette maker of marketing its products to children and teens. Juul has never targeted young people and has been working to regain the trust of regulators and the public.
The Wall Street Journal reported that Juul secured an equity investment from a group including two Juul directors to pay for the settlement. The settlement and financing put Juul on firmer ground and allowed the company to begin talks with potential strategic partners.
Juul reached late-stage talks with Altria last fall on a potential deal to sell Juul's international business or license its U.S. intellectual property, but those talks fell apart in September as Juul prepared for a potential bankruptcy filing, people familiar with the discussions said. The talks haven't previously been reported.
On September 30, Altria announced it was ending its non-compete agreement with Juul. The Marlboro maker has the freedom to develop its own new vaping products by purchasing another e-cigarette brand or developing its own new vaping products because of the decision. It gave Juul the freedom to sell himself or a significant stake to one of Altria's competitors.
Some people familiar with the matter said that Crosthwaite and other Juul executives traveled to Switzerland this month to discuss Juul's newly expanded options, as well as Japan Tobacco and Philip Morris.
Juul has also resumed discussions with Altria, these people said. Altria can't buy Juul outright because of antitrust concerns. In a case that is pending, the Federal Trade Commission is trying to unwind Altria's 2018 investment in Juul. Altria and Japan Tobacco formed a partnership in October to develop and sell heated tobacco devices in the U.S. and other new tobacco products abroad.
Altria sells Marlboro cigarettes in the U.S. while its erstwhile partner Philip Morris sells Marlboros outside the U.S. The companies split in 2008. Philip Morris plans to re-enter the U.S. market through the acquisition of Swedish Match.
In June the Food and Drug Administration ordered Juul to take its products off the U.S. market and stayed the order pending Juul's appeal. If the FDA rejects Juul's e-cigarettes, Juul could seek U.S. authorization for a newer version of its vaporizer that has so far has been released in Canada and the U.K. Juul also has other products under development.