Marlboro cigarette maker Altria Group Inc (MO.N) said on Friday it will invest $1.8 billion in the Canadian cannabis producer Cronos Group Inc (CRON.TO), taking a 45 percent stake in the company as it enters a rapidly growing legal marijuana industry.
Altria will buy 146.2 million of newly issued Cronos shares at C$16.25 per share, a 16.2 percent premium to the stock’s Thursday close on the Toronto Stock Exchange.
After the deal is closed, Altria will have the right to nominate four directors, including one independent, to the Cronos board.
Cronos announced earlier this week that Altria could make a possible investment hours after Reuters reported the tobacco giant was in talks to acquire Cronos.
The deal includes a warrant to acquire additional ownership interest in Cronos at a price of C$19 per share over the next four years, which could raise Altria’s stake to 55 percent.
Shares of Altria were up 1.1 percent at $54.99 in premarket trading.