Cronos Group Inc (CRON)

[Gladys Thong]

Altria(MO)'s fiduciary duty is to MO's shareholders.

It's NOT to CRON's shareholders.

Altria benefits from a further price reduction in Cronos stock

Altria does not care that the stock price is down. The more losses Cronos racks up, the more that the company will need the additional CAD$1.4 billion from Altria in the future. Then Altria could renegotiate the price of the warrants at a lower price per share, and for a larger stake in Cronos.

Altria may win, but will other Cronos shareholders?

After making their $1.8 billion investment in 2018, Altria is clearly in the driver’s seat. While shares are below the strike price of Altria’s warrants, they have every incentive for the Cronos Group stock price to go lower. If Cronos burns through its current cash hoard, they will need to go back to Altria for more money.

Altria gains a larger share of Cronos stock at lower prices. Like Constellation Brands’ (NYSE:STZ) de-facto takeover of Canopy Growth, Altria has a plan. While this may allow the tobacco giant to gain a toehold into the pot space at a lower price, Cronos shareholders are going to lose in the long run.

...... A deep-pocketed partner is a double-edged sword. (Emphasis added.)