Imperial Exits Cigar Business

Imperial Brands has agreed to sell its worldwide premium cigar businesses (Premium Cigars) in two separate transactions – one for the US business (Premium Cigar USA), and the other for the rest of the world (Premium Cigar RoW).

The two transactions total €1,225 million ($1,326 million) of consideration comprised of €185 million ($200 million) for Premium Cigar USA which is being sold to Gemstone Investment Holding, and €1,040 ($1,126 million) for Premium Cigar RoW which is being sold to Allied Cigar Corporation. The total consideration is equal to a multiple of 11.8x Premium Cigars’ FY 2019 EBITDA.

“We are delighted to be able to announce the sale of Premium Cigars in the current challenging global environment,” said Dominic Brisby and Joerg Biebernick, joint interim chief executives of Imperial Brands in a released statement. “This has been a complex transaction involving joint venture partners and assets across multiple geographies and we would like to thank everyone involved for working so hard to get the deal completed. We believe we have found the right long-term owners for Premium Cigars; they are committed to investing in the business to maximize future growth opportunities and are well-positioned to further develop operations internationally.”

Included in the Premium Cigar USA transaction is Tabacalera USA, which is responsible for the business’ premium cigar operations in the US, the world’s largest premium cigar market, and includes the assets of cigar distribution company Altadis USA; several online retail platforms including JR Cigar, cigar.com and Serious Cigars; and Casa de Montecristo, a brick-and-mortar retailer with 28 US stores.

Included in the Premium Cigar RoW transaction are premium cigar manufacturing facilities in Honduras and the Dominican Republic; several Cuban cigar interests including a 50 percent stake in Cuba’s official exporter Habanos, a unit of state-owned tobacco company Cubatabaco. Habanos’ products include well-known brands Cohiba, Montecristo and Romeo y Julieta.

Imperial Brands manufactures and sells tobacco and tobacco-related products including cigarettes, smokeless tobacco, papers, cigars, and e-cigarettes. Company-owned brands include Davidoff, Gauloises, Winston, Kool, Horizon, Cohiba, and Montecristo. The company was formerly known as Imperial Tobacco Group and changed its name to Imperial Brands in February 2016. The company was founded in 1901 and is headquartered in Bristol, United Kingdom.

The Premium Cigars business was acquired by Imperial Brands through its acquisition of Madrid-based cigarette and cigar maker Altadis in 2008.

AZ Capital is the financial advisor to Imperial Brands on these transactions which are expected to close in the third quarter of 2020.

Private Equity Professional | April 29, 2020

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