Juul Labs Increases Debt Offering Following FDA Review

Juul Labs has raised nearly $ 800 million in the face of escalating regulations in the US electronic cigarette market, demonstrating investor confidence in a vaping technology at the heart of a potential merger $ 200 billion between Philip Morris International and Altria.

The company disclosed in a document filed today that it had expanded its $ 325 million convertible debt offering announced earlier this month. Fourteen investors have already contributed $ 785 million to the offer, which should be used in Juul's global expansion efforts, which is facing a growing reaction at home.

Juul's amended disclosure comes hours after the US Food and Drug Administration and the Centers for Disease Control and Prevention announced they were examining 215 possible cases in 25 states in which "serious respiratory illness" was linked to drug use. 'ecigarettes.

An adult ecigarette user in Illinois died last week after being hospitalized for a respiratory illness, which caused investors to fear a new crackdown on vaping.

The CDC said Friday that e-cigarettes should not be used by young people or pregnant women, adding that other consumers concerned about possible risks should consider refraining from using e-cigarettes while waiting the end of his investigation.

Juul, which was launched in 2015, now holds more than 70% of the US market for electronic cigarettes. However, the FDA and CDC have not named any company as the focus of their investigation, stating that "there does not seem to be a single product involved in all cases". He added that many of the cases she was investigating related to cannabis extracts such as THC.

The regulatory outlook for e – cigarettes has become a hot topic for investors after the announcement one week ago that PMI, which manufactures Marlboro cigarettes outside of the United States, is considering a potential merger. $ 200 billion with Altria, his American counterpart last year. nearly 13 billion dollars for a 35% stake in Juul.

The purchase of Altria could allow PMI to access the fast-growing US e-cigarette market while allowing it to use its network to accelerate Juul's international distribution. The Lausanne-based company separately introduces its own heated tobacco product, Iqos, in the United States, under a license agreement with Altria.

The shares of both tobacco companies fell this week as investors and analysts questioned the validity of the proposed deal. Altria's shares were also put under pressure Thursday by a report of a possible investigation by the Federal Trade Commission on marketing Juul.

Juul is also fighting the ban on the sale of electronic cigarettes in San Francisco, which will come into force next year. The law requires that vaping products be approved by the FDA before being sold in stores, an obstacle that, according to Juul, will punish adult smokers who seek to pass traditional cigarettes.

The company announced on Thursday a new scanning system to check the age and identity of retail customers, to convince regulators that it is investing in safety procedures allowing children to not not leave his products by hand.

Last November, the FDA announced the ban on most flavored versions of electronic cigarettes and the Trump administration continues to report plans to crack down on young people. Alex Azar, Secretary of State for Health President Donald Trump, said Friday: "We will continue to use all the regulatory and repressive powers we have to end the consumer epidemic. electronic cigarettes among young people. "

JPMorgan advises Juul on the convertible debt investment.