Altria Enters Growing Oral Nicotine Products Category with on! Pouch Product

RICHMOND, Va.–(BUSINESS WIRE)–$MO–Altria Group, Inc. (Altria) (NYSE:MO) today announces that it has
entered into definitive agreements with the shareholders of Burger Söhne
Holding AG (the “Burger Group”), based in Switzerland, to acquire 80%
ownership of certain companies of the Burger Group that will
commercialize on! products worldwide. on! is an oral
tobacco-derived nicotine (TDN) pouch product.

“We’re excited to add on! to our companies’ terrific
non-combustible portfolio,” said Howard Willard, Altria’s Chairman and
Chief Executive Officer. “Through our companies and investments, we have
access to the leading products and brands in the moist smokeless
tobacco, e-vapor and heated tobacco categories. This acquisition will
add another non-combustible product to our portfolio in what we believe
is a high-potential, rapidly-developing oral TDN products category.”

Upon closing, Altria will invest $372 million for an 80% ownership
interest in the global business. Altria expects to complete the
transaction in the second half of 2019, subject to customary closing
conditions, and to finance the transaction with available cash.

About on!

on! is a nicotine pouch in the oral TDN category. The broad on!
portfolio consists of seven flavors and five nicotine strengths for a
total of 35 SKUs, all of which were available for sale in the U.S.
market as of August 8, 2016. on! is currently available in
limited distribution in several thousand U.S. retail outlets, is
available in Sweden and Japan and is also sold via e-commerce.

Additional Transaction Details

Altria formed a new subsidiary, Helix Innovations LLC (“Helix”), that
upon closing, will be the parent company of the Burger Group
subsidiaries currently manufacturing and selling on!.

The parties have also entered into an agreement under which Altria will
distribute on! across the U.S. in advance of the transaction
closing, which we expect will allow Altria to quickly expand retail

According to IRI, in 2018, sales of TDN products grew to around $60
million in the U.S., demonstrating approximately 250% growth compared to
2017. Approximately 20 million adult smokers in the U.S. are interested
in tobacco products that offer reduced-harm potential and, specifically,
more than six million adult tobacco consumers are open to trying oral
TDN products.

“We’re excited to put our resources behind on! and participate in
what we expect to be a fast-growing category. Combining our deep
understanding of adult tobacco consumers and Altria’s best-in-class
sales and distribution infrastructure, we expect to drive the on!
brand toward sustainable, long-term leadership,” said Allison Bolyard,
Senior Director and General Manager of Helix.

Altria’s Profile

Altria’s wholly-owned subsidiaries include Philip Morris USA Inc. (PM
USA), U.S. Smokeless Tobacco Company LLC (USSTC), John Middleton Co.
(Middleton), Sherman Group Holdings, LLC and its subsidiaries (Nat
Sherman), Ste. Michelle Wine Estates Ltd. (Ste. Michelle) and Philip
Morris Capital Corporation (PMCC). Altria holds equity investments in
Anheuser-Busch InBev SA/NV (AB InBev), JUUL Labs, Inc. (JUUL) and Cronos
Group Inc. (Cronos).

The brand portfolios of Altria’s tobacco operating companies include Marlboro®,
Black & Mild®, Copenhagen® and
Skoal®. Ste. Michelle produces and markets
premium wines sold under various labels, including Chateau Ste.
®, Columbia Crest®,
14 Hands® and Stag’s Leap Wine Cellars,
and it imports and markets Antinori®, Champagne
Nicolas Feuillatte
and Villa Maria Estate
products in the United States. Trademarks and service marks related
to Altria referenced in this release are the property of Altria or its
subsidiaries or are used with permission.

More information about Altria is available at
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Forward-Looking and Cautionary Statements

This release contains projections of future results and other
forward-looking statements that involve a number of risks and
uncertainties and are made pursuant to the Safe Harbor Provisions of the
Private Securities Litigation Reform Act of 1995.

Important factors that may cause actual results and outcomes to differ
materially from those contained in such forward-looking statements
include: the parties’ ability to consummate the transaction as expected,
including the possibility that one or more of the conditions to the
consummation of the transaction may not be satisfied; the parties’
ability to meet expectations regarding the timing, completion and other
matters related to the transaction; the risk of litigation, arbitration
and/or regulatory actions related to the proposed transaction; and any
event that could give rise to the termination of the agreement between
the parties. Other important factors include the possibility that the
expected benefits of the transaction may not materialize in the expected
manner or timeframe, if at all; prevailing economic, market, or business
conditions negatively affecting the joint venture; the fact that
Altria’s reported earnings and financial position and any distributions
made by the joint venture may be adversely affected by unfavorable
foreign currency exchange rates, tax and other factors, including the
risks encountered (including litigation and regulatory risks) by the
joint venture in its business; risks relating to the effect of
announcement or the consummation of the transaction on the joint
venture’s ability to retain and hire key personnel and maintain
relationships with customers, suppliers and other third parties; risks
generally related to joint venture investments, including Altria’s lack
of sole decision-making authority and disputes between the parties; and
the other factors detailed in Altria’s publicly filed documents,
including its Annual Report on Form 10-K for the year ended December 31,
2018 and its Quarterly Report on Form 10-Q for the period ended March
31, 2019.

Altria cautions that the foregoing list of important factors is not
complete and does not undertake to update any forward-looking statements
that it may make except as required by applicable law. All subsequent
written and oral forward-looking statements attributable to Altria or
any person acting on its behalf are expressly qualified in their
entirety by the cautionary statements referenced above.


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