A federal antitrust probe is reportedly stalling tobacco titan Altria’s $12.8 billion tie-up with Juul more than a year after the investment was announced.
The Marlboro maker and the e-cigarette giant have delayed completing parts of their deal while the Federal Trade Commission reviews Altria’s control of store shelves, the Wall Street Journal reported Friday.
Altria bought a 35-percent stake in Juul in December 2018 just about two weeks after shutting down its own e-cigarette brands. But the Virginia-based company can’t count Juul’s earnings toward its own, pick Juul board representatives or turn its nonvoting shares into voting shares until the FTC wraps up its review, according to the Journal.
The feds are reportedly focusing on Altria’s efforts to buy retail shelf space for its e-cigarettes even as it planned to close up that business and invest in Juul, the paper reported. Altria agreed to give shelf space to Juul as part of the investment deal.
Juul declined to comment on the status of the FTC’s review. Neither Altria nor the FTC immediately responded to requests for comment.
Altria confirmed the existence of the FTC review in an October regulatory filing, saying the commission had asked about the company’s role in ex-Juul CEO Kevin Burns’s September resignation. He was replaced by former Altria executive KC Crosthwaite.
The continuing antitrust review is the latest bump in the road for Juul, which is facing scrutiny from US officials amid concerns about a spike in youth vaping. Such worries led the Trump administration to temporarily ban many flavored e-cigarettes this month.
The FTC has said it’s also examining the advertising practices of Juul and five other e-cigarette companies. Juul spent more than $200,000 to market its products to teens, a congressional report found this summer.