Please ensure Javascript is enabled for purposes of website accessibility
Upcoming Event

Best Places to Work in Virginia

Hamburger Menu Hamburger Menu

Tag: joint venture

Altria strikes $150M deal with Japan Tobacco

Altria Group Inc., the Henrico County-based tobacco giant, announced Thursday it is partnering with Japan Tobacco Group to sell heated tobacco products in the U.S. and worldwide, placing Altria in direct competition with Juul Labs Inc. and Philip Morris International Inc.

The $150 million deal, in which Altria subsidiary Philip Morris USA has a 75% economic interest in the Horizon Innovations LLC joint venture and Japan Tobacco International has 25%, will include marketing of heated tobacco products in the United States and Japan.

The partnership comes after Altria sank $12.8 billion into a 35% stake in Juul, at the time the nation’s leader in the e-cigarette market. However, Juul soon faced major legal woes, including numerous lawsuits claiming the company had illegally marketed its products to teens. Having settled some lawsuits, Juul is facing possible bankruptcy, and the federal government has said it wishes to ban all Juul products from being sold in the U.S.

In September, Altria opted to end its noncompete deal with Juul, after its $12.8 billion investment was valued at $450 million as of June 30. In August, the company said it had not yet decided to end the agreement. “At this time, we continue to believe that these investment rights are beneficial to us,” Altria spokesperson Jennifer Kelly said at the time. “Therefore, we have not opted to be released from our noncompete obligations at this time, but we retain the option to do so in the future.”

Meanwhile, former subsidiary Philip Morris International and Altria attempted to reunite, but that agreement collapsed in November 2021, and PMI has received the European Union’s approval for its $16 billion purchase of Swedish Match AB, another competitor in the smokeless tobacco space.

Altria officials have long maintained that e-cigarettes and other nontraditional tobacco products are important products to help adult smokers wean off cigarettes, although much of the opposition to vaping products arose from their use by underage smokers. In subsequent years, the federal government has banned fruit and candy flavors in smoke-free products, limiting their appeal to teens.

“We are excited to begin a new partnership with JT Group, a leading international tobacco company,” Altria CEO Billy Gifford said in a statement Thursday. “We believe this relationship can accelerate harm reduction for adult smokers across the globe. We believe ‘Moving Beyond Smoking’ in the U.S. requires multiple FDA-authorized products within each smoke-free category to appeal to a diverse range of adult smokers. We believe that our joint venture and pipeline of heated tobacco products position us well to increase adoption of smoke-free products.”

Altria’s third-quarter earnings fell short of expectations, with $5.41 billion in revenue, down from $5.59 billion expected by Wall Street and a 2% decline from the same period last year. The Japan Tobacco announcement preceded the earnings release today. As of 12:50 p.m. Thursday, shares of Altria’s stock were down 0.93% at $45.96 per share.

According to Altria’s announcement, the deal with Japan Tobacco will produce two products that will reach the U.S. market by the first half of 2025: JTS’ Ploom heated tobacco device, which is similar to the IQOS product removed from U.S. markets last year in a patent dispute with R.J. Reynolds Tobacco Co., and Marlboro heated tobacco consumables, which Philip Morris USA will produce. Altria says that the Marlboro product is “a consumable that meets the definition of a cigarette under the U.S. Federal Cigarette Labeling and Advertising Act.”

Earlier this month PMI agreed to pay Altria Group $2.7 billion for U.S. commercialization rights starting April 30, 2024, and Altria’s announcement Thursday says the company does not expect to have commercialization rights when Horizon’s exclusivity requirements go into effect. The company also expects to partner with Japan Tobacco to launch a new heated tobacco capsule product in an international test market in late 2024 or early 2025, as well as starting work on a proposal to the U.S. Food and Drug Administration by the end of 2024.

Caesars ups Danville casino investment to $650M

Caesars Entertainment Inc. has once again upped its investment in the forthcoming Caesars Virginia casino and resort  in Danville, this time from $500 million to $650 million, while announcing Wednesday that the Eastern Band of Cherokee Indians is now a joint venture partner in the casino project.

Plans for the casino include a 500-room hotel, 1,300 slots, 85 live game tables, 24 electronic table games, a World Series of Poker-branded live poker room and a Caesars sports book. It is also slated to have a full-service spa, pool, bars, an entertainment venue that can accommodate up to 2,500 people and 40,000 square feet of meeting and convention space.

“This venture is a vital opportunity for our nation and our people. We are excited to be expanding our longstanding and successful partnership with Caesars Entertainment to develop a first-class resort that will be defined by luxury and service that Caesars’ guests have known and come to expect,” Principal Chief of the Eastern Band of Cherokee Indians Richard Sneed said in a statement.

Caesars, EBCI and a local minority investor will be partners in the joint venture, according to news release.

The casino will break ground this week and is expected to be completed in late 2024.

This is a breaking news story and will be updated.

$714M Wythe medical glove plant is solo venture now

Developers broke ground in January on the $714 million medical glove manufacturing complex planned for Wythe County’s Progress Park. Only now it may be a solo project, not a joint venture.

In October 2021, then-Virginia Gov. Ralph Northam announced that Alexandria-based Blue Star NBR LLC was building manufacturing facilities to make nitrile butadiene rubber (NBR) and billions of nitrile medical gloves in a joint venture with Delaware-based American Glove Innovations Inc. (AGI) that would create about 2,500 jobs by 2028. Northam billed the venture as “the largest job creation commitment Southwest Virginia has seen in a generation.”

But the joint venture may have fallen through, as Blue Star backed out of the partnership with AGI in January during the due diligence phase, according to Blue Star NBR CEO Scott Maier. “It’s just business,” Maier explained.

Blue Star is moving ahead with the project on its own, Maier said, and the decision to exit the joint venture will not impact the amount of the planned investment or the number of jobs previously announced. “They weren’t bringing any capital,” he said of AGI.

However, AGI spokesperson Deborah Brown, a partner with global law firm Quinn Emanuel Urquhart & Sullivan LLP, said the situation isn’t so cut and dry. “AGI is at least a 50% equity owner in [the project] and does not agree that it has departed or split from the venture,” Brown said in a statement. “AGI is committed to seeing the project through.”

Brown also took issue with Maier’s characterization, saying, “AGI brought substantial capital to the deal and has invested funds into the venture.”

Blue Star executives decided not to move forward with the partnership after learning of litigation involving Marc Jason, who was previously named co-CEO of the Blue Star-AGI joint venture.

Jason is CEO of London Luxury LLC, which filed a Jan. 5 lawsuit in New York State Supreme Court against Walmart Inc., charging that Walmart owes the company about $41 million for boxes of nitrile gloves produced in Malaysia and Thailand. The complaint goes on to state that London Luxury could lose more than $500 million on a deal to sell tens of millions of boxes of gloves to the retail behemoth.

“Walmart has created uncertainty regarding whether it intends to accept and pay for the vast majority of gloves it committed to buy,” the lawsuit claims.

In an emailed statement, a spokesperson for Walmart said the company has filed a counterclaim against London Luxury “for their repeated failure to meet product standards and delivery obligations.”

London Luxury did not immediately respond to requests for comment.

AGI touted the Walmart deal as part of the joint venture and the litigation spooked Blue Star. “They were bringing a purchase agreement from a large Fortune 500 company [to the table] and now that contract is in litigation,” Maier explained. “So, we kind of said, ‘You know what? When things settle down, maybe we can talk again.’”

However, Brown said that “AGI disagrees that an ongoing litigation serves as a legitimate basis for any change to the [Blue Star- AGI] venture.”

The fact that AGI may be out of the project doesn’t strike David Manley, executive director of the Wythe County Joint Industrial Development Authority, as particularly newsworthy.

“We’ve been working closely with … the Blue Star leadership since May,” Manley said. “We don’t anticipate any impact to the timeline or success of the project. The project is moving forward as expected.”

A spokesperson for the Virginia Economic Development Partnership said the state “is aware of Blue Star’s separation from AGI.”

“We do not anticipate any impact on the project timeline and outcome,” said Suzanne Clark, VEDP’s managing director of communications, marketing and communications.

Visitors traveling to Blue Star’s site at Progress Park this month will likely spot some heavy machinery. “We’re moving dirt,” Maier says. “It’s still on track to have that initial NBR plant open at the end of August.”

Blue Star’s nitrile butadiene rubber manufacturing facility will be followed by six planned nitrile glove manufacturing plants, the first of which is scheduled to open by March 2023, with five more glove factories opening between 2023 and early 2028. When it’s operating at full capacity, Blue Star NBR plans to manufacture 20 billion nitrile gloves per year — roughly 18% of the nation’s current supply.

On Feb. 4, the Virginia House of Delegates overwhelmingly approved legislation to fund up to $4.6 million for VEDP to provide recruitment and training of employees for Blue Star operations in Wythe County.

Recycling joint venture to create 210 jobs in Chesapeake

Two sustainable development companies — New Jersey-based Kamine Development Corp. and Minnesota-based Nicollet Industries LLC — will invest $267 million to establish a joint venture paperboard recycling and production facility in Chesapeake, a project expected to create 210 jobs, Gov. Ralph Northam announced Tuesday.

The 335,000-square-foot Celadon Development Corp. facility will be at the Chesapeake Deepwater Terminal site.

“Celadon Development Corp.’s state-of-the-art operation will produce in-demand fibers from recycled paper products, benefitting the environment and positioning Chesapeake and the commonwealth as pioneers of this exciting recycling technology in the U.S.,” Northam said in a statement. “The capital investment, new jobs and environmental stewardship opportunities provided by this project will pay dividends for years to come, especially as we build out our clean economy.”

The joint venture will convert recycled mixed paper and corrugated cardboard into reusable fiber sheets to supply middle-market paper manufacturers in China. The company will use a paper mill dryer system to produce its paper products from waste cardboard for a lower cost than bleached paper.

At peak operations, Celadon might use up to 300 rail cars per month and export 80,000 TEUs — 20-foot equivalent units — per year through the Port of Virginia. The joint venture would produce about $200 million in export value annually at full capacity.

“Virginia has one of the largest and most automated container terminals in the country, and the port has been extremely supportive of our project,” Celadon CEO Tim Zosel said in a statement. “We worked closely with the city of Chesapeake to find a great piece of property that could be developed into a first-class location for our project.”

The Virginia Economic Development Partnership worked with the city of Chesapeake, the Hampton Roads Alliance, the Port of Virginia and the General Assembly’s Major Employment and Investment Project Approval Commission to secure the project, for which Virginia competed with South Carolina. Northam approved a $2 million grant from the Commonwealth’s Opportunity Fund to assist the city of Chesapeake. Celadon is eligible to receive benefits from the Port of Virginia Economic and Infrastructure Development Zone Grant Program. The VEDP’s Virginia Jobs Investment Program will provide funding to support employee recruitment and training activities.

Arlington joint venture secures $100M Army Corps of Engineers contract

An Arlington-based joint venture between Dallas-based Jacobs Engineering Group Inc. and Kansas-based Black & Veatch Holding Co. won a $100 million contract with the U.S. Army Corps of Engineers for work in Fort Meade, Maryland, the Department of Defense reported Wednesday.

Under the firm-fixed-price contract, Jacobs/B&V will provide design and construction services for the completion of the east campus of Fort Meade, which is expected in September 2026.

Work locations and funding will be determined with each order.

Jacobs has about 55,000 employees in more than 40 countries and an annual revenue of about $14 billion.

Black & Veatch is an employee-owned engineering, procurement, consulting and construction company.

Fairfax and Prince William federal contractors launch joint venture

Herndon-based systems integration company Tyto Athene LLC and Veterans First Initiative (VFI) LLC of Prince William County have launched a joint venture: Haymarket-based Optima Government Solutions LLC. 

Optima will provide IT services including engineering and systems integration to the U.S. federal government and U.S. Department of Defense. The joint venture is a service-disabled veteran-owned small business joint venture formed through the U.S. Small Business Administration’s All-Small Mentor-Protégé Program (MPP).

In August 2018, Arlington Capital Partners launched Tyto Athene after its $75 million acquisition of Black Box’s government solutions unit.

 

Subscribe to Virginia Business.

Get our daily e-newsletter.