BENGALURU (Reuters) -Altria Group Inc announced on Friday that it would sell its subsidiary Ste. Michelle Wine Estates to private equity firm Sycamore Partners Management for $ 1.2 billion as the tobacco giant seeks to focus its business on alternatives to cigarettes for smokers.
As the popularity of cigarettes wanes in the United States, especially among young people, Altria has expanded its line of dipping tobaccos, nicotine sachets, and other smokeless oral tobacco products.
However, Altria took a heavy toll on its $ 12.8 billion investment in e-cigarette maker Juul Labs, as increased regulatory oversight caused the company’s value to plummet.
Ste. Michelle, who sells wine from estates in Washington State, Napa Valley, and other parts of the United States, joined Altria when the company bought smokeless tobacco company UST in 2008.
“We believe the transaction is an important step in creating Altria shareholder value and allows our management team to focus more on pursuing our vision of responsible transition of adult smokers to a non-combustible future” , said Billy Gifford, CEO of Altria. .
The agreement is expected to be finalized in the second half of 2021.
Uday Sampath report in Bangalore; Editing by Arun Koyyur