October 5, 2010 - On Monday, October 4th, Swedish Match (SM) and Scandinavian Tobacco Group (STG) announce the creation of a global company with leading market positions in cigars, pipe tobacco and fine cut tobacco.
Background: In Swedish Match 2009 Annual Report under Reshaping Swedish Match: Swedish Match International makes up the fourth division, with production and supply chain responsibility for cigars, as well as sales responsibility for cigars in Europe and the US premium cigar market, and overall responsibility for managing the lights and pipe tobacco businesses. As outlined in greater detail further below, if the proposed creation of a new company with Scandinavian Tobacco Group (STG) is achieved, much of what is now Swedish Match International will become part of this new company.
On January 15, 2010, Swedish Match AB announced that it had signed a letter of intent with Scandinavian Tobacco Group (STG) which would, if an agreement is reached, combine the cigar and pipe tobacco businesses of Swedish Match (with the exception of the US machine made cigar business) with the cigar, pipe tobacco, and fine cut tobacco businesses of STG.
Swedish Match - 2009 Annual Report
All necessary approvals have been obtained and the transaction was finalized on October 1st. The new company will operate under the name Scandinavian Tobacco Group, and will be headquartered in Copenhagen, Denmark. (For example: New Zealand - Scandinavian Tobacco granted clearance to merge its cigar and pipe tobacco businesses with Swedish Match..)
Swedish Match has contributed its cigar businesses (with the exception of US mass market cigars and its minority interest in Arnold André) as well as its pipe tobacco and accessories businesses. STG has contributed all of its tobacco businesses (cigars, pipe tobacco and fine cut tobacco. Skandinavisk Holding A/S holds 51 percent of the new STG, and Swedish Match the remaining 49 percent.
The joint venture to create the world’s second-largest cigar maker makes the Scandinavian snuff maker an easier takeover target, according to Rolf Karp, an analyst at Ohman Equities. Swedish Match will be able to focus on the smokeless business now,” Karp said. “It does make it a bit easier to take over, because you could just sell off the remaining stake in cigars.”
Tobacco companies have expanded into smokeless products as cigarette consumption falls in North America and western Europe. Philip Morris International Inc. formed a joint venture with Swedish Match last year to sell snuff worldwide, while Imperial Tobacco Group Plc bought the Skruf brand in 2005 and said this month it’s now Sweden’s second-largest snuff seller by value. (Swedish Match finalizes sale of South African operation to PMI..; PMI to buy Swedish Match South Africa..; PMI will jointly sell SNUS worldwide with Swedish Match AB..; Imperial Tobacco acquires rest of Swedish Tobacco Company Skruf Snus AB...)
References: Swedish Match completes transaction with Scandinavian Tobacco Group, Press Release, Swedish Match, 10/4/2010; Swedish Match Cigar Venture Makes Takeover Easier, Analyst Says by Tom Mulier (email@example.com), editor responsible for this story: Celeste Perri at firstname.lastname@example.org), Bloomberg.com, 10/4/2010.