(Reuters) - Tobacco company Altria Group Inc MO.N is in talks to take a minority stake of 20 to 40 percent in e-cigarette maker Juul Labs Inc, people familiar with the matter said on Wednesday.

FILE PHOTO: An electronic cigarette device made by JUUL is shown in this picture illustration taken September 14, 2018. REUTERS/Mike Blake/Illustration/File Photo

The companies declined to comment.

Big tobacco companies, including Marlboro-maker Altria, have been investing in e-cigarettes as U.S. smoking rates decline, but those products have lost significant market share over the last year as Juul’s popularity has surged.

The talks have been ongoing over the last few months, and the size of the stake could change, the sources said. The talks could still fall apart because of the many shareholders and regulators involved, one source said.

Such a deal could allow Juul to continue to grow with reduced risk, the people said, without losing control of the company.

Privately held Juul’s vaping devices, which resemble a USB flash drive, have helped the company quickly become the market leader in the U.S. e-cigarette business, growing from 13.6 percent of the market in early 2017 to more than 75 percent this month, according to a Wells Fargo analysis of Nielsen retail data.

Juul’s sleek design and sweet flavors, including mango and creme, made it particularly popular among high schoolers. “Juuling” has become synonymous with vaping, with young people posting videos and photos of themselves using the product at school or with friends, often under the hashtags #doit4juul or #juullife.

Juul’s e-liquid also has a much higher nicotine content than earlier versions of U.S. e-cigarettes. The company says its products are meant only for adults looking to convert from traditional cigarettes.

Earlier this month, the U.S. Food and Drug Administration announced new curbs on sales of flavored tobacco products, including Juul’s mango and cool cucumber, to age-restricted stores and online merchants that use age-verification checks.

But Juul, launched in 2015, was valued at more than $16 billion based on a July 2018 funding round, according to venture capital database PitchBook Data Inc.

Early Juul investors included Tao Capital Partners, headed in part by Nicholas Pritzker, who formerly ran the Hyatt hotel empire. Other investors include Fidelity Investments Inc and Tiger Global Management, according to PitchBook.

Altria has invested in the e-cigarette sector in recent years through its Nu Mark subsidiary, which sells devices such as the MarkTen e-cigarettes in convenience stores and tobacco shops across the country. In 2014 Altria acquired e-cigarette startup GreenSmoke Inc for $110 million.

Altria’s products, however, have lost significant ground to Juul over the last year, as have e-cigarette brands from other major tobacco companies.

The market share of British American Tobacco Plc BATS.L, which sells Vuse e-cigarettes, fell from 21.4 percent of U.S. e-cigarette sales in February to 9.6 percent this month, while Altria's share fell from 11.1 percent to 4.4 percent over the same period, according to the Nielsen data.

Any potential investment in Juul carries its own set of risks.

San Francisco-based Juul has faced heightened pressure from U.S. regulators as the growing popularity of flavored e-cigarettes among teenagers has sparked fears of a new generation of nicotine addicts.

Federal data released earlier this month showed a 78 percent increase in high school students who reported using e-cigarettes in the last 30 days, compared with the prior year, coinciding with the rise in Juul’s popularity.

Altria’s shares have fallen by more than 20 percent over the year as cigarette smoking continues to decline in the United States. Federal data from earlier this month showed cigarette smoking among U.S. adults reached an estimated 14 percent in 2017, the lowest level ever.

Altria’s shares rose 1 percent to $55.55 after the bell on Wednesday.

The Wall Street Journal first reported on the negotiations earlier on Wednesday.