LONDON (ShareCast) - (Sharecast News) - Cigarette maker Altria Group has agreed to buy a 45% stake in Toronto-based cannabinoid company Cronos Group for $1.8bn.
Under the terms of the agreement, Altria will pay CAD16.25 for each Cronos share, which is a premium of 41.5% to the 10-day volume weighted average price of CAD11.48. Altria will have an option to buy additional shares in Cronos at CAD19.00 each, exercisable over the next four years.

As part of the deal, Altria will have the right to nominate four directors, including one independent director, to serve on Cronos' board of directors, which will be expanded from five to seven directors.

Altria's chairman and chief executive officer Howard Willard said: "Investing in Cronos Group as our exclusive partner in the emerging global cannabis category represents an exciting new growth opportunity for Altria.

"We believe that Cronos Group's excellent management team has built capabilities necessary to compete globally, and we look forward to helping Cronos Group realise its significant growth potential."

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

"The proceeds from Altria's investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers. Importantly, Altria shares our vision of driving long-term value through innovation, and we look forward to continuing to differentiate Cronos Group in this area."

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