Late yesterday, MO announced they are giving up their entire JUUL investment in exchange "for a non-exclusive, irrevocable global license to certain of JUUL’s heated tobacco intellectual property". Note that this agreement is for heated tobacco IP, not e-vapor IP. Also, it is non-exclusive. So JUUL can sell or license this IP to other companies as well.

 

So what exactly is this IP? It's not specified in the press release, nor has MO filed any reports with the SEC yet. My guess is that it isn't that meaningful. Most likely just a move to avoid future IP lawsuits from JUUL & essentially sell JUUL for nothing, to order to pave the way to acquire NJOY.

 

By the way, the Wall Street Journal followed up their initial report on the potential NJOY acquisition with an additional article stating that NJOY's market share in the US vape segment is around 3% (compared to JUUL's 25%, and BAT's VUSE at over 30%), and NJOY's annual sales are around $150 million. So the rumored price tag of $2.75 billion (plus an additional $500 million for some achieving some potential regulator approvals) seems incredibly high.

 

I struggle to make any sense of what MO is doing here. I guess the charitable explanation would be that they believe that vaping is going to be the preferred RRP in the US market for the foreseeable future. And with a combination of IP and regulatory influence, they will be able to keep out (or force out) competitors. Alternatively, you could believe that a combination of their own IP, plus the JUUL IP, plus the PODA and NJOY IP, can somehow be used to make some great new RRP's of their own. I guess we'll hear more at their investor day this month (which BTW, is still not scheduled on their website).

 

Whatever the strategy here is, I remain very skeptical.