AZ Digitals Blog

Altria Group Inc. is heading north for its next investment. Hence taking a minority stake in Canadian cannabis company Cronos Group Inc.

The tobacco company reached an agreement to acquire newly issued shares in Toronto-based Cronos Group Inc. The transaction represents a 45-per cent equity stake in Cronos Group. This is for an aggregate investment by Altria of approximately $1.8 billion.

In Canadian dollars, the deal comes in at $16.25 per share, for an aggregate investment of approximately $2.4 billion.

As part of the agreement, at closing, Altria will have the right to nominate four directors. This is including one independent director, to serve on Cronos Group’s board of directors. As a result, the board will expand from five to seven directors.

Expected to come to a close, i.e. the state of the transaction in the first half of 2019.

“Investing in Cronos Group as our exclusive partner in the emerging global cannabis category. It represents an exciting new growth opportunity for Altria,” said Howard Willard, Altria’s chairman, and CEO.

COMPETING IN THE GLOBAL MARKETS

“We believe that Cronos Group’s excellent management team has built capabilities necessary to compete globally. Furthermore, we look forward to helping the Cronos Group realize its significant growth potential.”

According to Altria, the pact includes a warrant to acquire an additional ownership interest in Cronos Group. This is at a price of CAD $19 per share exercisable over four years from the closing date.

If exercised in full, the warrant would increase Altria’s ownership in Cronos Group. This increase will be by 10 per cent to approximately 55 per cent.

“Altria is the ideal partner for Cronos Group. Providing resources and expertise. These are resources we need to meaningfully accelerate our strategic growth,” said Mike Gorenstein. He is the Cronos Group’s chairman, president, and CEO.

“The proceeds from Altria’s investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in [research and development] and brands that resonate with our consumers.

“Importantly, Altria shares our vision of driving long-term value through innovation. As well as we look forward to continuing to differentiate Cronos Group in this area,” he added.

The investment gives Altria a foot in the door of the emerging global cannabis sector. Talking regarding the next decade it is believed to be poised for rapid growth.

It also creates a new growth opportunity in an adjacent category. A category that is complementary to Altria’s core tobacco businesses, the Richmond-based company said.

ANALYSTS’ TAKE

Since 2016, Cowen and Co. held the thesis that cannabis will provide incremental growth for tobacco. According to Vivien Azer, director, and senior research analyst at Cowen.

From a high-level perspective, Cowen finds this deal encouraging, she explained, because:
The global cannabis opportunity remains large and untapped. Cannabis spans multiple consumer verticals including adult use as a substitute social lubricant to alcohol; health and wellness; over-the-counter pain and sleep; and pharmaceuticals.

Challenged by continuous disruption and regulation, the US tobacco’s challenges have increased.
The news came the same day that Altria announced it was discontinuing the production and distribution. This is of all MarkTen and Green Smoke vapor products. Also including VERVE oral nicotine contains products, as Convenience Store News previously reported.

Driven by the financial performances of these products. The decision companywide was based on the current and the expected performances. Also, coupled with regulatory restrictions that burden Altria’s ability to quickly improve these products.

THE FINANCIAL PERFORMANCES

“Overall, we applaud Altria’s decision to pivot fast and to move into a new adjacent category (cannabis). Something that is complementary to its core tobacco business” said Bonnie Herzog. He is the managing director of tobacco, beverage and convenience store research at Wells Fargo Securities LLC.

Altria has received committed financing totaling approximately CAD $2.4 billion from JPMorgan Chase Bank, N.A. Altria may consider seeking permanent financing in the future.

Perella Weinberg Partners LP is the financial advisor to Altria. Wachtell, Lipton, Rosen & Katz, and Goodmans LLP are providing legal counsel to Altria for the deal. Hunton Andrews Kurth LLP is providing legal counsel to Altria regarding the financing.

Lazard Ltd. is the financial advisor to Cronos Group. Sullivan & Cromwell LLP and Blake, Cassels & Graydon LLP are providing legal counsel to Cronos Group for the deal.

Altria’s wholly-owned subsidiaries include Philip Morris USA Inc., U.S. Smokeless Tobacco Co. LLC, John Middleton Co., Sherman Group Holdings LLC, and its subsidiaries, Nu Mark LLC, Ste. Michelle Wine Estates Ltd. and Philip Morris Capital Corp. Altria hold an equity investment in Anheuser-Busch InBev SA/NV.

Cronos Group is a globally diversified and vertically integrated cannabis company with a presence across five continents. The Group operates two wholly-owned Canadian licensed producers: Peace Naturals Project Inc. The organization which received the first non-incumbent medical cannabis license granted by Health Canada, and Original BC Ltd. The company is based in the Okanagan Valley, British Columbia. Cronos Group operates a portfolio of brands. These include Peace Naturals, a global medicinal brand, and two Canadian adult-use recreational brands, COVE and Spinach. The Group has multiple international production and distribution platforms across five continents.

Read the related blog: COCA-COLA IS EYEING THE CANNABIS MARKET

New patent filing reveals a system for “baking” car to help odor dissipate faster

The much-loved “new-car smell” is borne of the combination of materials in a new car, such as leather and plastic, releasing gasses into the air, mixed with various sealants and adhesives. Here in North America, we mostly love it. But apparently, China doesn’t.

According to Car Advice, Ford has patented a new system that will help its Chinese-market autonomous or semi-autonomous cars get rid of their new-car smell after purchase.

The system has been designed to remove the smells by “baking” the cars, essentially: having them self-park in the sun and automatically opening the windows to help the heat remove the odor.

The system can also run the engine and turn the heater up to full, so make sure you don’t leave any children or animals in the car when it starts up.

The toxic scent of vehicles is the number-one-priority car problem for Chinese consumers: it’s rated even higher than engine noises, road noises, or bad fuel economy. Ford has a special smell team to identify how bad the smells can be, rating them anywhere from “not perceptible” to “extremely disturbing.”

Wouldn’t you like to have that job? As a Ford smellier?

Currently, China is such a huge market for vehicles it’s impossible for automakers to ignore these demands. So if China wants their new cars to smell like cars that have been left in the sun for a while, then they’re going to get them.

how unsafe is the internet really? How much damage can be done online?

The internet is much more unsafe than it was 20 years ago. Cyber crime has risen year after year and has evolved every step of the way. Cyber
criminals are so smart, and modern-day technology introduces so many new innovative threats to be wary of. Cyber War is real, and we are engaged in battle. It’s important to know who you’re fighting against, what weapons they are using, and what you are fighting for.

Who Are Cyber Criminals?

Who am I protecting myself from? How much power do they have?

The picture to the left depicts the stereotypical image visualized when someone says “hacker”. Like all crime, there are many individually driven criminals. But also like all crime, it has evolved to become more organized. For example, some of the most recognizable organized hacker groups are Anonymous (although they commit crimes that are more activist in nature), and Morpho (known for hacking Microsoft, Apple, Facebook and Twitter) [1]. These organizations are extremely powerful, enough to successfully attack governments and major corporations.

What Are Cyber Criminal’s Motives?

How much is my data worth?
There are many theories as to why people become criminals, but what is undeniable is the volume of opportunity cyber crime can generate for a common lawbreaker. A huge motivation is potential financial gain. Cyber crime has become so big and powerful that it is estimated that global cyber crime alone generates 1.5 TRILLION dollars annually[2]. It’s also undeniable that it’s harder to physically steal someone’s wallet and get away with it than it is to steal their credit card information online and get away with it. Criminals are much braver behind a screen, and there are many ways that they can keep anonymous and commit crimes.

What Are The Biggest Cyber Security Threats Against Me?

What are the ways I can be attacked? How can I be protected?

Phishing emails and social engineering attacks
Almost everyone has received one of these spam emails: an email requesting either information, login credentials, banking information, etc. You can see from the red texts that this is clearly a scam. Phishing emails often have spelling mistakes, incorrect email domains and suspicious links. Here, we tell you how to identify phishing emails. These attacks have become more sophisticated. Cyber criminals will impersonate someone close to you, a mother, a boss, etc., and email you from an impersonating account.

Distributed Denial of Service Attacks (DDoS)

This is the technical term to overload an online service by overwhelming it with traffic from multiple sources. In physical terms, it’s like closing a highway because there’s too much traffic on the road. Cyber criminals will do this to shut down your network, and it’s even something that can be bought over the Dark Web to commit to someone else’s servers if you had the mind to.

Ransomware

Like a simple, physical ransom, criminals will take something of importance to you and demand you to pay them back. In cyber crime, what’s important is your data. Cyber criminals will encrypt your files on your computer making them accessible only to them, and demand you pay them to get your files back. This can be extremely costly for business, and in fact most 75% of small to medium businesses report a ransomware attack has led to business-threatening downtime. Discover how to protect your business from ransomware.

Cryptojacking

With the emergence of cryptocurrencies like Bitcoin, Ethereum and Ripple, etc., has created another way that cyber criminals can remain anonymous online. Cryptojacking is the unauthorized use of another’s computer to mine cryptocurrencies, or cryptomine. Cryptomining, in the simplest terms, is the process of creating new cryptocurrencies – and once completed, you are awarded with currency. This requires a large amount of computer processing power, so cyber criminals will trick you into downloading scripts onto your computer to use your power.

Data breaches

Large corporations fall at the hands of hackers seemingly every week. One of the biggest data breaches to date was Facebook, where 30 million users were compromised. You can find out here the 10 best ways to stay safe on Social Media.

Viruses & Malware

There are so much computer viruses and malware nowadays that modern computers are bought with a trail run of an antivirus software, like Webroot. Viruses and malware can attack in many ways, from deleting files, to shutting down your whole device. Ensure your antivirus programs are always up to date and do routine scans of your devices.

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