A major investor in leading e-cigarette-maker Juul has seen its stake in the company drop by more than two-thirds.
Tobacco giant Altria Group has blamed the $8.5bn (£6.5bn) fall in value on rising legal and regulatory threats.
Having paid $12.8bn for a 35% stake in Juul in 2018, it revealed a huge write-down to investors on Thursday.
Altria chief Howard Willard said he was “highly disappointed” with the lower valuation.
The firm had already announced a $4.5bn hit last year.
Altria paid what was considered a high price for its stake in Juul, with a deal that valued the firm more than double what previous investors had. But Altria had defended its decision, saying it was buying into Juul’s explosive growth, while traditional smoking was on the decline.
In 2018, Juul, which remains privately owned, reported sales of more than $1bn, up from $200m in the prior year. And analysts expected sales to top $3bn last year.
But since Altria’s purchase of a stake in Juul, there has been a public backlash against e-cigarettes, fuelled in part by a reported rise in teen vaping.
This month, the US health regulator announced it would ban fruit-flavoured pods, which had been among Juul’s most popular products. The move followed similar measures in many US states. Other countries have also tightened rules.
Juul also faces criminal investigations in the US over its marketing practices. In September, its chief executive stepped down, and was replaced by a former Altria executive.
Altria, which makes Marlboro cigarettes, said it had re-worked its agreement with Juul and will stop providing services including logistics, distribution and access to retail shelf space to Juul.
It will continue to help Juul with regulatory services including the submission of its products, which contain nicotine, for approval by the Food and Drug Administration.
Altria also said it does not expect to receive earnings contributions from Juul over the next three years.
The firm’s shares sank by more than 6%, after the write-down pushed the firm to a fourth quarter loss of $1.81bn, compared to a profit $1.25bn a year earlier.