Altria in talks to buy marijuana producer Cronos Group

Packs
of Marlboro cigarettes are displayed for sale at a convenience
store in Somerville, Massachusetts July 17,
2014.
REUTERS/Brian
Snyder

• Altria, the tobacco giant behind well-known brands like
  Marlboro, is reportedly in talks to acquire Canadian marijuana
  producer Cronos Group, according to Reuters. 
• The two companies have not yet agreed to a deal, and neither
  confirmed a deal was in the works. 
• If the deal goes through, it would represent the largest
  tie-up between the tobacco and marijuana sectors. 

The tobacco behemoth behind one of the US’s most popular
cigarette brands is in talks to buy a Canadian marijuana
producer.

Marlboro-maker Altria is in early talks to acquire Cronos Group,
a Canadian marijuana producer, according to a
Reuters report. 

Cronos has not yet agreed to a deal, and the talks are expected
to continue for several weeks, sources familiar with the matter
told Reuters. Shares in the company rose as much as 23% on the
news, pushing Cronos Group’s market cap close to $2 billion.

Altria is also
reportedly in talks to purchase a minority stake in the vape
startup Juul in an effort to diversify its business as
cigarette smoking declines in the US.

Cronos isn’t the first marijuana producer that Altria has
considered acquiring. The Globe and Mail reported in October that
the company was
considering purchasing a minority stake in Aphria. 

Read more:
Coca-Cola is eyeing a deal in the marijuana industry, and
insiders say it’s a sign that other beverage giants may soon dive
in

Short sellers, however, have targeted Aphria. Gabriel
Grego, the founder of Quintessential Capital
Management, said
the company was a “black hole” on Monday at the Kase
Learning Short-Selling Conference in New
York.

Altria did not immediately respond to a request for comment, and
a representative from Cronos declined to comment on “market
rumors.” 

If a deal is reached, it would represent the largest tie-up
between the tobacco and marijuana sectors. In June, UK-based
Imperial Brands
invested through its venture arm in Oxford Cannabinoid
Technologies a biotech company working on research into
cannabinoids, the active compounds in the cannabis plant.

Tobacco giants are the latest in a line of consumer
companies evaluating the burgeoning, but volatile, marijuana
industry.

Constellation Brands, the beverage maker behind Corona and
Modelo,
paid $4 billion in August for a 38% stake of Canopy Growth.
And Coca-Cola is reportedly eyeing a deal to
produce beverages infused with cannabidiol (CBD), a
non-psychoactive ingredient in marijuana, for the Canadian
market.

Canada
legalized marijuana for all adults in October.