Acquisition of NJOY

12 Months Ended

Dec. 31, 2025

Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]

Acquisition of NJOY

Acquisition of NJOY

In June 2023, we acquired NJOY Holdings (“NJOY Transaction”), which provided us with full global ownership of NJOY’s e-vapor product portfolio, including NJOY ACE. The total consideration for the NJOY Transaction of approximately $2.9 billion consisted of approximately $2.75 billion in cash payments (net of cash acquired) plus the fair value of up to $500 million in additional contingent payments. The fair value of these contingent payments on the acquisition date was approximately $130 million, which was included in the total consideration. For additional information on contingent payments, see Note 7. Financial Instruments. We funded the initial NJOY Transaction cash payments at closing through a combination of borrowings under a $2.0 billion term loan facility, the issuance of commercial paper and available cash. In July 2023, we repaid the term loan facility in full, at which time the term loan facility terminated in accordance with its terms.

We accounted for the NJOY Transaction as a business combination. The final purchase price allocation to the assets acquired and liabilities assumed in the NJOY Transaction as of the acquisition date was as follows:

(in millions)	Final Purchase Price Allocation
Cash and cash equivalents	$	22
Receivables	7
Inventories	19
Other assets	7
Property, plant and equipment	16
Other intangible assets:
Developed technology (amortizable)	1,000
Trademarks (amortizable)	190
Accounts payable	(7)
Accrued liabilities	(20)
Deferred income taxes	(101)
Total identifiable net assets	1,133
Total consideration	2,901
Goodwill	$	1,768

The excess of the total consideration over the identifiable net assets acquired in the NJOY Transaction primarily reflected the value of future growth opportunities in the e-vapor category. None of the goodwill or other intangible assets is deductible for tax purposes.

The significant assumptions used in determining the fair values of the identifiable intangible assets included volume growth rates, operating margins, the assessment of acquired technology life cycles and discount rates. We determined the fair values of the identifiable intangible assets using an income approach. The fair value measurements were primarily based on significant inputs that are not observable in the market, such as discounted cash flow analyses, and thus were classified in Level 3 of the fair value hierarchy. As of the acquisition date, the estimated weighted-average useful life of these intangible assets was approximately 18 years.