January 25, 2011 - SOBORG, Denmark--As Scandinavian Tobacco Group A/S (STG) awaits anti-trust approval on acquiring Lane Ltd. from Reynolds American Inc.
(RAI), STG executive vice president, Christian Hother Sorensen, took time from his busy Denmark day to talk to Tobacco E-News about the company's plans.
Under terms of the transaction, expected to close in the first half of 2011, STG has agreed to pay $205 million in cash for Tucker, Ga.-based Lane. The deal, Sorensen said, is beneficial for both companies. (a href="http://snus-news.blogspot.com/2011/01/rai-reaches-agreement-to-sell-lane.html">RAI - reaches agreement to sell Lane Limited to Scandinavian Tobacco Group A/S (STG))
STG had divested its cigarette business in 2008 to focus on cigars, pipe tobacco and roll-your-own fine-cut tobacco. (BAT to Acquire Most of Denmark's ST..) "There's been a nice fit between Lane and Scandinavian Tobacco Group in all aspects," he said of Lane's brand portfolio, which includes Kite and Bugler fine-cut roll-your-own tobacco, Captain Black pipe tobacco and little cigars and Winchester little cigars.
Likewise, Reynolds CEO Susan M. Ivey said in a release that the Lane divestment will allow her company to focus on the cigarette, moist-snuff and modern smoke-free categories.
STG expects the acquisition to contribute earnings before interest, taxes, depreciation and amortization (EBITDA) of $45 million and sales volumes of 525 tons of pipe tobacco, 980 tons of fine-cut tobacco and 450 million little cigars.
Currently, STG's only U.S. presence consists of some pipe tobacco sales, with Swedish Match North America acting as distributor. Later this year, STG plans to create its own U.S. sales force to handle the Lane products. "So for the retailer, they would in the not-so-distant future be visited by a rep who focuses on the Lane products," Sorensen said.
The company also plans to focus on international sales of the Captain Black products. "We do see it as a brand with a lot of heritage in parts of the world," he said, listing the Middle-East, Africa and Russia. "It has some sales already, but we do believe we can increase it, and grow the brand further, both in pipe tobacco and little cigars."
Scandinavian Tobacco Group A/S (Parent Company of General Cigar) is now the world’s second largest cigar company by Mario Takeyama, Cigar Explorer, 10/4/2010. STG formerly named Skandinavisk Tobakskompagni.
Scandinavian Tobacco Group (STG) was established as a new company Oct. 1, 2010 as a result of a merger of the tobacco business of the former Scandinavian Tobacco Group A/S and the cigars and pipe tobacco business of Swedish Match AB (except its U.S. mass-market cigar business). (New Global Company: Swedish Match and Scandinavian Tobacco Group..)
Reference: The Future of Lane STG discusses plans for Lane acquisition by Linda Abu-Shalback Zid, Tobacco e-news, 1/25/2011.