Altria Acquires E-Cig Maker Green Smoke for $110M - ABC News
So that's
Blu $140MM
Skycig $80MM
Green Smoke $110MM
So that's
Blu $140MM
Skycig $80MM
Green Smoke $110MM
Green-Smoke Acquired for $110MM+
- Thread starter Cyberslinger
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Just wait. The next generation of ecigs from new startups using mod technology will be acquired for much much more money. Could be Billions. Scratch that. Will be Billions.
Big tobacco isn't interested in that market - they could have bought out companies like ProVape and even Innokin a long time ago if they were - cigalikes is where they believe the money is at. Sad to see Green Smoke get bought out - they were a founder member of SFATA along with V2 - I guess their perspective on the market is about to get a lot more blinkered
The only reason that they aren't interested is because no one in the mod space has a product with mass market appeal and scalability. Provape and Innokin only manufacture one part of what the ecig business is. When all of the elements are put together is when things will really get interesting in the ecig space. The trick is going to be razor-razorblade model with mod quality performance.
And yeah it is a little sad but I wish them the best. They have been around for a long time.
And yeah it is a little sad but I wish them the best. They have been around for a long time.
Equity Research
MO:Acquires E-Vapor Brand Green Smoke--Broadens E-Cig Portfolio
· MO Acquires Premium E-Vapor Company Green Smoke--We View As Positive--Altria announced its NuMark subsidiary acquired e-vapor business Green Smoke, Inc. for $110MM in cash plus up to $20MM in incentive payments. Given Green Smoke's 2013 revenue of $40MM, this implies a price-to-sales purchase multiple of 3x, compared to LO's purchase of blu eCigs for $135MM, or 2.5x sales in April 2012. The deal is expected to close in Q2 2014. The majority of Green Smoke's sales are online in the U.S., though the company does have a small presence in c-stores. According to Nielsen, Green Smoke's retail sales in c-stores for the past 52 weeks through the period ending December 21, 2013, were $3.9MM for 0.8% share. Altria took a "deep scan" of the entire e-vapor space and felt Green Smoke was the right fit at the right time given: (1) Green Smoke presents an opportunity for MO to develop a portfolio of e-vapor brands, complementing its existing MarkTen e-vapor product, as Green Smoke can reach a different consumer since it doesn't look like a traditional cig and it is bigger than MarkTen with a stronger battery; (2) Altria can leverage its sales distribution and infrastructure (Green Smoke has 140 employees, or 40 in the U.S., compared to Altria's 2,000 person sales force); (3) Green Smoke's proprietary technology; and (4) Altria will likely include Green Smoke's technology in its technology and distribution sharing agreement with PMI as Green Smoke has minimal international distribution. Overall, we believe this acquisition is positive as we have long believed companies would develop portfolios of e-cig brands that cater to different consumers. Please see below (and starting on page 2 of our note) for direct quotes/comments from our c-store retailer contacts on Altria’s acquisition of Green Smoke.
· Feedback from Industry Contacts--MO's E-Cig Acq Not A Surprise But Surprised MO Chose Green Smoke--Could Drive Growth Of E-Vapor Category--We reached out to several of our industry contacts to take a pulse on what they think of Altria's acquisition. Though many of our c-store contacts aren't as familiar with Green Smoke given its small presence in c-stores, the general tone was positive as one contact said: "This gives Altria a way to get in quickly and 'test the waters'." Other positives noted by our contacts include: "the acquisition adds some credibility to e-vapor as a category" and "Altria has excellent marketing groups that should add momentum to sales opportunities quickly." Bottom line, we agree and believe that Altria can leverage its sales force, retailer relationships, and marketing expertise to quickly bring broader distribution to Green Smoke. From a regulatory perspective, this acquisition may put further pressure on the FDA to regulate e-vapor products as they become increasingly more mainstream. Bottom line--we continue to be very optimistic on the prospects of e-vapor and believe consumption of e-vapor products could surpass combustible cigs within the next decade.
Then why stick with cigalikes? They could have acquired a second gen company which I think would give them acess to about 60% of the market. Just not the convenience store market.
I think it's not because any of the mods are too small, it's because none of them fit their existing business model like cigalikes. Remember that big tobacco has a current product to protect, not the cigarettes themselves but the brand and logo that a cigarette has become. The iconic image of the cigarette is hard to let go of, it's been good to them and indeed replacing that icon would damage the cigarette market, they don't want to make their product look not cool. Well any more not cool than it already has become.
Big tobacco is a big ship to turn around and they need time to move to cigalikes then second gen then maybe if they are feeling completive enough they might test market some third gen stuff. Meanwhile we'll be on sixth gen or later.
Or we could be happy to buy Big T's product, they do make good cigarettes and they have the power to sell a pack of 10 cigalikes for the same as a pack of smokes, all is needed is a good enough battery and high enough nic. That would keep a habitual smoker happy and we would still be chasing clouds with our high end luxury products. Think 20 Marlborough and a lighter versus a Cuban cigar and humidor and Ronson lighter.
Now you see why the antz whos objective is to punish the tobacco companies hate ecigs? They have the potential to regenerate the income and buzz for the tobacco cos that they used to have when smoking was ubiquitous.
Big business in general will always prefer to buy companies that hold patents over those that don't. How many "mod" companies hold patents? tj99959 was right when he pointed out the patent that Altria gained in this purchase.
BT is and will buy up E-cig market for their on revenue protection. Then FDA makes their ruling which will give BT control. Goverment is, will apply same rules as analogs. Back to square one. IMO
- Apr 2, 2009
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I strongly suspect the key reason Altria bought Green Smoke is because Altria's MarkTen e-cigs aren't very appealing to smokers or vapers, and because Altria's test market for MarkTen in Indiana hasn't gone nearly as well as Altria anticipated.
Don't feel sorry for Green Smoke, as Kevin Davis can now retire without ever having to work again.
Don't feel sorry for Green Smoke, as Kevin Davis can now retire without ever having to work again.
I think the idea is to buy up and put out of business. Then promote and raise the price of their own products. Big Tobacco losing alot of revenue here, but obviously their pockets are deep enough.
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