In accordance with its strategic vision to become a world leader in cigars and a leading player in smoking tobacco, STG has signed a letter of intent with SM to form a company combining the tobacco business of STG with the cigars businesses of SM (with the exception of SM’s US mass market cigar business).
- Scandinavian Tobacco Group (STG) – formerly named Skandinavisk Tobakskompagni - will contribute all its tobacco business (cigars, pipe tobacco and fine cut tobacco)
- Swedish Match (SM) will contribute all its cigar business (with the exception of US mass market cigars), as well as its pipe tobacco and accessories business
- Completion of the transaction is subject to due diligence by both parties, final transaction agreements, bondholder approval, and regulatory review and approval
In accordance with its strategic vision to become a world leader in cigars and a leading player in smoking tobacco, STG has signed a letter of intent with SM to form a company combining the tobacco business of STG with the cigars businesses of SM (with the exception of SM’s US mass market cigar business). The company will also include the pipe tobacco and accessories business of SM, as well as distribution of lighters and matches in relevant markets.
The combined entity will have an annual turnover of just under MEUR 700 and a combined volume of more than 2.5 billion cigars and 1,650 tons of pipe tobacco, placing it firmly as one of the largest cigar companies in the world and as a world leader in pipe tobacco. The company will have leading positions in the markets for premium cigars in the US and for cigars in Europe, and hold strong positions in a number of other markets. Its leading cigar brands will include brands such as Café Crème, Henri Wintermans, Colts and Mercator, among others, from STG, with SM contributing brands such as Macanudo, Partagas (US), Punch (US) and La Paz. Its leading pipe tobacco brands will include Erinmore, Clan and W.Ø. Larsen from STG and Borkum Riff and Half&Half from SM.
STG will hold 51% of the shares in the new company, with the remaining 49% of the shares being held by SM. On the basis of the preliminary valuations, which are subject to due diligence by both parties, STG will compensate SM by approximately MEUR 40 to account for the planned shareholding and the relative differences in enterprise values on a debt and cash free basis. Anders Colding Friis, CEO of STG, will become CEO of the new company.
SM produces and sells market-leading brands in smokefree tobacco products, cigars, lighters and matches. SM’s global operations generated sales of MSEK 14,139 for the twelve months period ending September 30, 2009. It has production units in 10 countries and the SM share is listed on the NASDAQ OMX in Stockholm.
“The Letter of Intent marks the intention of both parties to form a value enhancing business combination within the cigar and smoking tobacco industry. Such a business combination would be complementary, create synergies and result in an overall stronger company,” says Anders Colding Friis, CEO of Scandinavian Tobacco Group.
Completion of the transaction is subject to due diligence by both parties, final transaction agreements, as well as bondholder and regulatory approvals. Signing is expected during the first half of 2010 and completion as soon as possible thereafter. Please note that there can be no assurance that the transaction will be completed.
For further information, please contact:
Scandinavian Tobacco Group A/S
CEO Anders Colding Friis
(+45) 39 55 62 00
ABOUT SCANDINAVIAN TOBACCO GROUP
- a world leading manufacturer of cigars and traditional pipe tobacco
- approx. 8,200 employees in the Dominican Republic, Honduras, Nicaragua, Indonesia, Europe, New Zealand, Australia, Canada and the US
The Group’s brand portfolio contains more than 200 international, regional and local tobacco brands, including the cigar brands Café Crème, La Paz, Henri Wintermans, Macanudo, CAO, Partagas (US) and Cohiba (US). Pipe tobacco brands include Captain Black, Erinmore, Borkum Riff and W.Ø. Larsen, while leading fine-cut tobacco brands include Bugler, Break, Escort, Bali Shag and Tiedemanns.
The Group is ultimately owned by two Danish foundations (51%) – the Augustinus Foundation and Det Obelske Familiefond – and by Swedish Match (49%). Both Danish foundations have been active in the tobacco industry for more than 250 years. Swedish Match is a publicly owned company listed on the Stockholm Stock Exchange.
Read more: www.st-group.com.
Scandinavian Tobacco Group A/S
CVR 31 08 01 85