Settlement with UST adds new cigar range
Under the terms of the settlement, Swedish Match will take over the brands for the cigars produced by USTs subsidiary U.S. Cigar Sales Inc. Other assets, such as plants, tobacco plantations, inventories of finished products and tobacco stocks, will also pass into Swedish Matchs ownership. The transfer will strengthen Swedish Matchs position, particularly in the US market for premium cigars.
U.S. Cigars plant is located in Danl몠Honduras, close to one of General Cigars plants. The company also grows its own tobacco in the nearby Talanga Valley. Among the best-known cigar families produced by the company in Honduras are Don Tomౠand Astral. Connoisseurs rate Astral Talanga Valley Selection among the finest cigars produced in Honduras. It has yet to be decided how the new operation will be integrated with Swedish Match. The agreement is expected to become effective in June this year.
Swedish Match brought its action against UST under the US antitrust legislation before a court in Kentucky in July 2002. The lawsuit followed a court judgment awarding another competitor a large sum in damages from UST. The process has been under way since then, but in the meantime discussions concerning a settlement were initiated.
This was because it was in the interests of both parties to put the affair behind them. It is expensive to conduct legal proceedings, as well as diverting much time and energy from normal operations, explains Fredrik Peyron, corporate attorney at Swedish Match.
In addition, legal disputes always involve an element of uncertainty, given that you can never be 100-percent certain what the outcome will be. Now we know the result, and we have also reached an agreement with which we are pleased, he adds.
THE SETTLEMENT ALSO REMOVES a major obstacle that has prevented Swedish Match and U.S. Tobacco from cooperating on other, industry-wide issues. Both companies share the same view regarding smokeless products and harm reduction, and there is much instructional and informational work to be done in this area.
