Press releaseMar 26, 1999
Swedish Match to acquire mass market business of General Cigar Company, USA
- Swedish Match will become
a leading global cigar company and strengthen its leading
Other Tobacco Products ("OTP") position in the
United States (cigars, snuff, pipe and chewing tobacco)
- Creates an effective
platform for Swedish Match to enhance and sustain the
development of key growth products such as snuff in the
US
- Creates an ongoing
alliance between General Cigar and Swedish Match –
for distribution of certain premium cigars
General Cigar Holdings, Inc.
(NYSE: MPP) and Swedish Match AB (XSSE: SWMA, Nasdaq: SWMAY)
announced today that they have entered into a definitive Asset
Purchase Agreement for the sale of General Cigar’s
mass-market cigar business to Swedish Match for $200 million in
cash. The mass market cigar business includes two manufacturing
facilities, Dothan, Alabama, USA and Santiago, Dominican
Republic; machinery and equipment; inventories; trademarks; and
other commercial assets and liabilities. In addition, as part of
the sale, General Cigar and Swedish Match have entered into an
ongoing strategic relationship through a Tobacco Supply Agreement
and a Master Distribution Agreement. Among the mass-market brands
being sold are Garcia y Vega (the number one selling mass-market
cigar using a natural leaf wrapper), White Owl, Tiparillo and
Tijuana Smalls.
The terms of the Tobacco Supply
Agreement call for General Cigar to supply Swedish Match’s
tobacco needs for the acquired business. The Master Distribution
Agreement provides for Swedish Match’s sales force in the
U.S. to sell a select number of General Cigar’s premium
cigar brands that are currently sold through mass-market
distribution channels.
Commenting on the transaction,
Edgar M. Cullman, Jr., General Cigar’s Chief Executive
Officer said, "This transaction allows us to focus our
efforts on the branded premium cigar business, the largest
portion of our business, where we can add the greatest strategic
value because of our heritage and expertise."
"The addition of the
General Cigar mass market business to our existing US operations
will complement our operations in the US perfectly and will help
to ensure that we can further develop our position in the US for
our entire product range", said Lennart Sundén, Swedish
Match’s President and CEO. "This strengthening of our
sales and distribution in the US will provide a growth platform
for our other key strategic products such as snuff. The
transaction will have a positive effect on net earnings and on
net cash flow for Swedish Match."
General Cigar expects to use the
net proceeds from the sale to reduce outstanding debt, to make
selective acquisitions of premium cigar brands, for general
corporate purposes and to take advantage of opportunities that
may arise in the international cigar market place.
The transaction is subject to
regulatory review and other customary closing conditions and is
expected to close in late April.
Peter J. Solomon Company
represented General Cigar in connection with the transaction.
General Cigar Holdings, which
traces it roots to 1906, is a leading manufacturer and marketer
of premium cigar brands including Macanudo, Partagas, Punch (MPP)
and Hoyo de Monterrey, as well as mass market cigars including
Garcia y Vega, White Owl and Tiparillos. In addition to being a
major grower of high-quality Connecticut shade wrapper tobacco,
General Cigar owns and operates the Club Macanudo cigar bars in
New York City and Chicago.
Swedish Match is an
international group with headquarters in Stockholm, Sweden. The
company manufactures a broad range of tobacco products, matches
and disposable lighters which are sold in approximately 140
countries. Swedish Match is one of the world’s largest cigar
manufacturers with a turnover in the cigar operations of 900
MSEK. Annual sales in 1998 amounted to approximately 8,200 MSEK.
Swedish Match is listed on Stockholm Stock Exchange and on
Nasdaq.
For further information, please
contact:
| Lennart
Sundén, President and Chief Executive Officer |
office |
+46 8 658
01 75 |
| |
|
|
| Massimo
Rossi, Executive Vice President and Deputy |
office |
+46 8 658
11 78 |
| to Chief
Executive Officer |
|
|
| |
|
|
| Sven
Hindrikes, Senior Vice President and Chief |
office |
+46 8 658
02 82 |
| Financial
Officer |
mobile |
+46 70
567 41 76 |
| |
|
|
| Bo Aulin,
Senior Vice President, Secretary |
office |
+46 8 658
03 64 |
| and
General Counsel |
mobile |
+46 70
558 03 64 |
| |
|
|
| Boel
Sundvall, Vice President, Investor Relations |
office |
+46 8 658
01 73 |
| |
mobile |
+46 70
651 39 09 |
The following files are available for download
(DOC, 59 kB)
(PDF, 93 kB)