Marlboro maker places $2.4 billion bet on marijuana

Canada voted earlier this year to legalise weed. Credit PA

— There are a handful of companies listed on the Toronto Stock Exchange devoted exclusively to cannabis, either for medicinal or recreational use, or both: Canopy Growth Corp., Aurora Cannabis Inc. and Cronos Group Inc. The investment will give Altria a 45% stake in Cronos at C$16.25 per share.

The transaction between the two publicly traded companies represents a 45 percent equity stake in Cronos Group at a price of $16.25 (CAD) per share for an aggregate investment by Altria of approximately United States dollars $1.8 billion.

Gorenstein said the proceeds will enable Cronos to continue to grow the business overseas and in Canada. That is a 16.2% premium over the stock's Thursday close, according to Reuters.

"Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth", said Mike Gorenstein, Cronos Group's chairman, president and chief executive officer.

"As one of the largest companies in the adult consumer products sector, Altria has decades of experience in regulatory, government affairs, compliance, product development and brand management that we expect to leverage, particularly as new markets for cannabis open around the world", Cronos said in its press release.

Cronos CEO Mike Gorenstein said the investment "puts us in an fantastic position to succeed in a number of areas".

"We'll work with them on genetics, technical assistance, taking back the product and ultimately processing it, formulating it, branding it and distributing it", he said.

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Meanwhile, Total TOTF.PA said a rising number of its filling stations were running dry as a result of "yellow vest " road blocks. The sweep of the protests and their wide support by citizens of all political stripes has shocked Macron's government.

Altria can nominate four directors, including one independent director, to the Cronos board, giving it 4-to-3 control.

Altria had been assessing market opportunities in the cannabis industry since at least September.

It is the Virginia-based company's first foray into cannabis.

The purchase is the second involving a big-money deal connected with a Canadian marijuana company in recent months.

Cronos was up 22 percent to C$17.08 at 12:10 p.m.in Toronto after earlier gaining as much as 38 percent, its biggest intraday gain since July 2016.

This story will be updated throughout the day.

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