E-cigarettes have become commonplace in the U.S. Their popularity is growing globally, too. New proof of this comes as tobacco giant Altria Group has bought Juul Labs, a leading e-cigarette maker. The amount of the sale is what has people reeling. Altria Group paid $2 billion for just one third of Juul Labs’ company.
That massive sum has those outside of the industry paying attention. Juul Labs’ founders Adam Bowen and James Monsees are now billionaires. They are the first in this industry to have crossed this threshold.
Part of the payout will be passed on to Juul’s employees, too. The Sydney Morning Herald is reporting that the employees of Juul will get $1.3 million bonuses.
“Juul’s 1500 employees are receiving a $US2 billion collective bonus as part of Altria’s payment to buy a 35 per cent stake in the company,” SMH writes, “according to a person familiar with the matter, who asked not to be identified because the details are private.”
That $1.3 million payout is an average. Some will receive more, others less, but it is still a stunning Christmas present.
“Marlboro maker Altria announced on Thursday that it invested $US12.8 billion ($18 billion) in Juul, valuing the firm at roughly $US38 billion,” SMH noted.
“Assuming the transaction dilutes the holdings of current shareholders, the founders each own stakes of 3.6 per cent, or $US1.36 billion apiece, according to the Bloomberg Billionaires Index. Bowen, 43, and Monsees, 38, each controlled 5.6 per cent of Juul after a July funding round that valued each of their holdings at $US843 million.”
Why is the brand so valuable for the tobacco industry?
“This is a disruptive technology and it shows where consumers want to go,” Ken Shea, a Bloomberg Intelligence analyst, told reporters. “It’s growing so fast that the cigarette companies like Altria need to look at a way to mitigate not only cigarette use but also think for the future.”
Bowen and Monsees began their e-cigarette business back in 2007 with a company they called Ploom. They were both graduate students at the time, working on master’s degrees at Stanford. Ploom evolved into Japan Tobacco. Later, the name was changed again to Pax Labs. Juul was a spinoff from Pax.
Many see the new e-cigarette trend as the end of traditional tobacco. While that end may be far off, it pace of investment seems to support the argument.
came up with their big idea while pursuing master’s degrees at Stanford University and founded Ploom in 2007.
They sold the name to Japan Tobacco eight years later and renamed their company Pax Labs. Around the same time, the pair introduced a USB-shaped e-cigarette and called it the Juul. Last year, Juul was spun out from Pax and has gone on to dominate the market.