Imperial Closes on €1.225 Billion Sale of Premium Cigar Division – halfwheel.com
Nearly six months to the day after it announced an agreement to sell its premium cigar portfolio, Imperial Brands, plc has said it has completed the €1.225 billion ($1.43 billion) sale of its premium cigar division.
Or at least most of it anyway.
The deal includes 50 percent of the ownership of Habanos S.A., the company behind the distribution and sales of Cuban cigars worldwide, one of the largest cigar companies and retailers in the U.S., and eventually, the largest premium cigar factory in the world.
No new information is known about the buyers, a Hong Kong-based investment group. The buyers have still not identified themselves, though company registration filings in Hong Kong linked Instant Alliance Limited to an individual working for Suncity Group, a gambling and hospitality company ran by billionaire Alvin Chau. Suncity has said that it is not directly involved, though that wouldn’t exclude Chau from the deal.
Last month—after the window on the previously scheduled closing date was expiring—Imperial announced a new closing date of Oct. 29. The transaction will be divided into two parts, one for the American assets and the other for the non-American assets.
Gemstone Investment Holding Ltd will buy the company’s U.S.-based businesses for €185 million ($216.3 million), a deal that will include Tabacalera USA which is made up of:
- Altadis U.S.A. — The company behind Montecristo, Romeo y Julieta and others in the U.S.
- Casa de Montecristo — A chain of high-end retail stores, some owned by Imperial and others owned by franchise operators.
- JR Cigar — The second-largest cigar retailer in the world.
Instant Alliance Limited, formerly Allied Cigar Corporation S.L., will pay €1.04 billion ($1.22 billion) for the rest of the premium cigar assets, including:
- Flor de Copan — A cigar factory in Honduras.
- 50 percent stake in Habanos S.A. — A joint-venture with the Cuban tobacco monopoly in the company that controls the sales and marketing of Cuban cigars worldwide.
- 50 percent stake in Internacional Cubana de Tabaco S.A. — A joint-venture which makes Cuban machine-made cigars
- 50 percent stake in Promotora de Cigarros S.L. — A joint-venture which distributes Cuban machine-made cigars around the world.
- Tabacalera de García — The world’s largest cigar factory.
- Stakes in local Habanos distributors around the world through a 50 percent share of Altabana S.L.
The sale of Tabacalera de García won’t be completed until 2021. The company says that deal is worth €69 million ($80.67 million). It will only include the premium cigar operations, Imperial will retain the mass market cigar production facilities.
Furthermore, €88 million of the total sale will be deferred for 12 months from today, and Imperial has agreed to a six-month deferral of €250 million, which it described as financing.
The buyers have already put down various deposits, meaning there was roughly €640 million still to be transferred as part of the closing.
The deal will mark an end to a 20-year run where Imperial, and its predecessor Altadis, were involved in the sale of Cuban cigars after acquiring a 50 percent share in Habanos S.A. in September 2000.
Imperial says it will use most of the money—€1.1 billion—to pay down debts.
The company sells cigarette brands like John Player & Sons, Kool and Winston; machine-made cigars like Backwoods; the e-cigarette brand blu; and other traditional tobacco products.