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Altria Takes $4.5 Bln Charges On Investment In Juul

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Altria Group, Inc., a major investor in Juul Labs, Inc., recorded a non-cash pre-tax impairment charge of $4.5 billion related to its investment in the troubled e-cigarette maker.

While reporting a hefty third-quarter loss, Altria said it considered increased likelihood of U.S. Food & Drug Administration or FDA action to remove flavored e-vapor products from the market pending a market authorization decision. The decision also reflects various e-vapor bans put in place by certain cities and states in the U.S. and in certain international markets.

The cigarette giant had made a $12.8 billion investment for a 35 percent stake in the vaping company. The company said it has certified substantial compliance with the Federal Trade Commission second request and expects a resolution in first-quarter 2020.

Altria CEO Howard Willard said, "Of course we're not pleased to have to take an impairment charge on the Juul investment. Certainly in the range of scenarios when we made our investment in Juul, we did not anticipate this dramatic of a change in the e-vapor category."

Altria has restrictions on its ability to sell or otherwise transfer shares of JUUL until December 20, 2024.

Juul is facing criminal investigation by Federal prosecutors for its marketing tactics towards teens and youth amid the alarming increase in EVALI - the vaping related illness. The company recently decided to suspend the sale of non-tobacco, non-menthol-based flavors in the U.S.

Juul also plans to cut about 500 jobs by the end of the year as part of a broader reorganization plan.

The state and federal officials are taking strong stand against e-cigarettes and vaping as more deaths are being reported related to EVALI - the lung illness caused by the use of e-cigarette, or vaping products.

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