Altria-backed cannabis producer Cronos explores sale (updated)

Curaleaf Holdings

06/07/2023 23:22

(Adds company confirming talks in paragraph 1; adds statement
from Cronos in paragraph 4, updates share price in paragraph 6)
    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 , confirmed on
Thursday it is in talks with potential buyers to explore a sale
of the company, after Reuters reported 
    on the talks
    .  
  
    Cronos is working with a financial adviser to handle
expressions of interest in a deal from other companies,
including U.S.-based peer Curaleaf Holdings Inc  CURA.CD ,
according to people familiar with the matter.    
    The sources requested anonymity because the discussions are
confidential, and they cautioned that no transaction is certain.
        In a statement, Cronos 
    said it
     "is in the initial stages of reviewing these indications of
interest."
  
    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, before giving back all gains and closing lower at $1.88,
giving it a market value of C$954.62 million ($714.38 million).
So far this year, the shares have lost a quarter of their value.
    The future of the cannabis industry is uncertain as more
favorable regulatory regimes in North America have fueled fierce
competition among more companies. 
    The recreational use of cannabis is 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 = 1.3363 Canadian dollars)

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