Swedish Match AB has signed a letter of intent with Scandinavian Tobacco Group to form a company combining the tobacco businesses of STG with the premium and machine made cigar businesses of Swedish Match, with the exception of the US mass market cigar business.

This follows a strategic review of Swedish Match and is consistent with the goals of becoming the global smokefree leader while developing the cigar business to be best in class. The new company would also include the pipe tobacco and accessories businesses of Swedish Match, as well as distribution of lights products in relevant markets. Based on the Swedish Match and STG 2008 full year results, the combined enterprise would have had an annual turnover of approximately EUR 670 million and an EBITDA of approximately EUR 125 million and a combined cigar volume of more than 2.5 billion cigars. Leading cigar brands would, for example, include Macanudo, Partagas (US), Punch (US) and La Paz from Swedish Match as well as Café Crème, Henri Wintermans, Colts, and Mercator from STG. Leading pipe tobacco brands would, for example, include Borkum Riff and Half & Half from Swedish Match and Erinmore and Clan from STG.
Swedish Match is to hold 49 per cent of the shares in the new company, with the remaining 51 per cent of the shares held by STG. Anders Colding Friis, the CEO of STG, would assume the role of CEO of the new company.
The completion of this transaction is subject to due diligence by both parties and final transaction agreements, as well as bondholder and regulatory approvals. Signing is expected to take place during the first half of 2010 with completion as soon as possible thereafter. (pi)