On November 13, according to foreign reports, Altria group has announced that according to its investment in electronic cigarette manufacturer Juul in December 2018, Altria group has chosen to convert its non voting shares in Juul labs into voting shares.
Altria said in a press release that Altria does not intend to exercise other governance rights it has acquired after the conversion, including the right to elect directors of Juul’s board of directors as a passive investor or vote on its Juul shares before the results of the FTC vote.
In April 2020, the Federal Trade Commission (FTC) filed an administrative lawsuit to challenge Altria’s minority equity investment in Juul. Altria believes it has a strong defense capability and intends to defend its investment vigorously.
As previously disclosed, Altria will consider its investment in Juul based on its fair value option, according to the press release. Under this option, Altria’s consolidated income statement will include any cash dividends received from its investment in Juul and any changes in the fair value of the investment, which will be measured quarterly. Altria intends to treat quarterly changes in the fair value of the investment as a special item and exclude these changes from the adjusted diluted earnings per share.
Altria made a few investments in Juul labs in December 2018. In exchange for the investment, Altria Group acquired 35% of Juul labs shares through non voting shares and converted them into voting shares (as defined in Altria group / Juul purchase agreement) as required by the antitrust liquidation. Under the terms of the revised agreement announced in January 2020, Altria can appoint two representatives to Juul’s board of directors.