Altria-backed cannabis producer Cronos explores sale -sources

Curaleaf Holdings

06/07/2023 20:29

(Adds share price reaction in 5th paragraph)
    By Anirban Sen
       NEW YORK, July 6 (Reuters) - Cronos Group Inc  CRON.TO ,
the Canadian cannabis producer backed by cigarette maker Altria
Group Inc  MO.N , is exploring options that include a potential
sale after attracting acquisition interest, people familiar with
the matter said. 
    Toronto-based Cronos is working with a financial adviser to
handle the expressions of interest in a deal from other
companies, including U.S.-based peer Curaleaf Holdings Inc
 CURA.CD , the sources said.    
    The sources requested anonymity because the discussions are
confidential, and they cautioned that no transaction is certain.
    Cronos and Curaleaf declined to comment. Spokespeople for
Altria did not immediately respond to a request for comment. 
    Shares of Cronos jumped as much as 25% in Toronto on the
news, giving the company a market value of C$1.03 billion 
($771.13 million). Prior to Thursday, the shares had lost a
quarter of their value so far this year.
    The future of the cannabis industry is uncertain as more
favorable regulatory regimes in North America have fueled fierce
competition among a growing number of companies. 
    The recreational use of cannabis in now legal in 23 U.S. 
states. Growing and selling marijuana remains illegal under U.S.
federal law, although President Joe Biden's administration has
signaled it is seeking a review on how the drug is classified. 
    U.S. lawmakers have also been considering making it easier
for the industry to access banking services. 
    For the first quarter, Cronos posted a net loss of $19.3
million, compared with a loss of $32.7 million a year ago. Net
revenue declined 20% to $20.1 million. Cronos has total cash,
including short-term investments, of about $836.43 million,
according to its first-quarter report.
    Altria, which holds a 41% stake in Cronos, invested $1.8
billion in the company in 2019.

($1 = 1.3357 Canadian dollars)

 (Reporting by Anirban Sen in New York; Additional reporting by
Abigail Summerville in New York; Editing by Leslie Adler and
Richard Chang)
 ((Anirban.Sen@thomsonreuters.com; Twitter: @asenjourno; Reuters
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