Cronos stock was surging on Friday following news of a major investment into the company from Altria (NYSE:MO).
An announcement from Cronos (NASDAQ:CRON) confirms that Altria is planning to make a C$2.40 billion equity investment into the marijuana company. This money will have MO buying up shares of Cronos stock for C$16.25 each.
The deal will have Altria owning 45% of Cronos stock once it is complete. CRON says that it plans to use the money from this transaction to further its “product development and commercialization capabilities.”
Cronos’ and Altria’s deal doesn’t just stop that at that initial C$2.40 billion. It also includes Warrants for the company. If MO chooses to exercise these warrants, it will have the company spending another C$1.4 billion for an additional 10% stake in CRON. This will have it paying C$19.00 per share for Cronos stock.
Cronos also notes that there are other benefits from teaming up with Altria via this deal. Included in these benefits is a better understanding of regulations. This insight will likely give the pot company a leg up as the weed industry continues to grow.
Cronos points out that its Board of Directors has already given its unanimous approval to the deal with Altria. It is also advising that shareholders of Cronos stock vote in the favor of the deal as well.
Investors that are looking for some additional insight concerning the deal between Cronos and Altria can follow this link.
CRON stock was up 22% and MO stock was up 1% as of noon Friday.
As of this writing, William White did not hold a position in any of the aforementioned securities.
