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| WHAT TO BUY WITH $3.9 BILLION? |
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Page 1 of 2  Plus: New brands announced that will debut at the IPCPR showLos Angeles, June 30 – European regulators have approved the $3.9 billion (U.S.) sale of the cigarette businesses of Danish tobacco firm Skandinavisk Tobakskompagni A.S. to British American Tobacco (BAT), with some minor conditions. Analysts estimate that BAT will have a 60 percent market share for cigarettes in Scandanavia after the deal is completed, notably acquiring the House of Prince business with significant market share in Scandanavia and central and eastern Europe. The deal will require BAT to sell off some roll-your-own brands in Norway to satisfy the European Union regulators, but it will leave Skandinavisk Tobakskompagni – better known as ST – with $3.9 billion in cash and a nice cigar business to build on. ST owns Henri Wintermans, a dominant player in small cigars (1.3 billion sold annually!), as well as Nashville-based C.A.O Cigars, which not only markets its own blends, but is also the distributor for Torano Cigars and for the Dunhill Dominican and Dunhill Signed Range brands. What about Swedish Match? Noting that Imperial Tobacco paid 14.2 times the 2006 earnings of Altadis, S.A. for a $22.3 billion purchase price, using the same multiplier on Swedish Match, based on 2007 earnings (about $494.1 million U.S.), the price would be $7.02 billion. Even after using the proceeds from the sale to BAT, that’s probably too rich for ST since it would have to finance the rest of the purchase. That leaves possibilities which are much smaller in size, but equally interesting, including assembling a new, super-cigar company to challenge Imperial’s Altadis division, Swedish Match and Davidoff of Geneva. Imagine putting together a powerhouse that started with Henri Wintermans and C.A.O. – whose manufacturing is done primarily in Honduras and Nicaragua – with a Dominican powerhouse like La Aurora or MATASA? It’s worth noting that the C.A.O. Vision line is already made at La Aurora and the La Aurora and Leon Jimenes brands already have a strong international presence in duty-free shops as does Henri Wintermans. Or perhaps an even bolder stroke, in buying the Tabacalera A. Fuente and the J.C. Newman Cigar Company? Time will tell, but some interesting discussions over coffee and cigars are certain at the upcoming International Premium Cigar & Pipe Retailers Association convention and trade show coming up in July in Las Vegas. Tatiana goes mocha The well-respected Tatiana brand of flavored cigars will introduce a new series called Mocha at the upcoming IPCPR convention and trade show in Las Vegas. |
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Did you know?
“Although the preferred humidity setting for cigars is 70%, temperature control of 70-75 F is equally important.
