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Scandinavian Tobacco to light up a deal with Royal Agio
Posted on Monday, 16 September 2019 14:10
Scandinavian Tobacco Group has agreed to acquire Royal Agio Cigars from Highlands Beheer for EUR 210.00 million on a debt and cash free basis.

Pending the green light from European competition authorities and the conclusion of a statutory employee consultation process in the Netherlands, the deal is due to close in the first half of 2020.

Established in 1904, Royal Agio claims to be a leading tobacco manufacturing company, which produces more than 770.00 million cigars per year.

Its offerings come in a range of models, including cigarillo, senoritas, robusto and torpedo and the group’s portfolio includes brands such as Mehari’s, Panter and Balmoral.

Headquartered in Duizel, Royal Agio has 2,500 employees and sells its products to over 100 countries worldwide.

The target generated earnings before interest, tax, depreciation and amortisation of EUR 18.00 million on net sales of EUR 133.00 million in 2018.

As a result of the acquisition, Scandinavian Tobacco will gain access to the Royal Agio’s portfolio and strengthen its position within the European machine-made cigar markets.

Based in Copenhagen, the purchaser claims to be the world’s leading manufacturer of cigars and traditional pipe tobacco.

Its portfolio comprises brands such as La Paz, Captain Black, Erinmore and Borkum.

For the six months ended 30th June 2019, Scandinavian Tobacco generated net sales of DKK 3.28 billion (EUR 439.08 million), up 6.4 per cent from DKK 3.07 billion in the corresponding period of 2018.

The buyer expects the transaction to increase its earnings per share in the second year and its group leverage ratio will temporarily exceed 2.5x upon completion.

According to Zephyr, the M&A database published by Bureau van Dijk, the deal represents the second-largest transaction targeting a tobacco manufacturer announced worldwide since the beginning of 2019.

In total, 111 of these have been signed off so far this year, the biggest involved Altria Group, via Helix Innovations, agreeing to buy an 80.0 per cent stake in Burger Sohne Holding’s on! Pouch business for USD 372.00 million.

© Zephus Ltd