Imperial Says Sale of Premium Cigar Division Delayed, Expects Deal Completed in One Month – halfwheel.com
The most valuable transaction involving a premium cigar company has been delayed due to the coronavirus COVID-19 pandemic.
Imperial Brands, plc—the British multinational tobacco company—has announced that the €1.225 billion ($1.429 billion) sale of its premium cigar division is now expected to be completed by Oct. 29, which the company says is “slightly delayed from the original timetable.” Imperial had originally said the sale would close in Q3.
The company did not say what the reason was for the delay, beyond “challenges caused by COVID,” but Imperial said the buyers have already made a non-refundable down payment of €91.7 million ($107 million) and have agreed to make another non-refundable payment of €85 million ($99.2 million) by Oct. 7. Those two payments would represent 14.4 percent of the total deal.
Imperial says it has also agreed to provide a six-month vendor loan worth up to €250 million ($291.6 million) to the buyers upon completion of the deal.
The deal was announced in April 2020.
The sale includes two separate transactions, one involving the U.S.-based parts of its businesses and the other involving the international premium cigar businesses. While the buyers are two separate entities, it is believed they are actually one group.
Gemstone Investment Holding Ltd will buy the company’s U.S.-based businesses for €185 million ($215.8 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 ($1.171 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 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.