Imperial Brands has agreed to sell its premium cigar business to two investment consortia for a total of €1,225m (US$1.3bn). Gemstone Investment Holding Ltd will acquire Premium Cigar USA for a total consideration of €185m (US$202m), and Allied Cigar Corporation will acquire Premium Cigar RoW for a total consideration of €1,040m (US$1.1bn). The latter sale includes 50% of Cuba’s Habanos SA which exports Cuban premium cigar brands including Montecristo, Romeo y Julieta and Cohiba.
UK based Imperial said that it was not in a position to disclose details about the individual investors behind the bids but Cubadebate, quoting market sources, suggested that ‘there are family investment offices among the participants’ adding ‘it has not been confirmed whether the Chinese group Huabao, which held advance negotiations with Imperial, is participating in either or both of the alliances’.
Imperial owns half of Cuba’s state cigar exporter Corporación Habanos through its Spanish subsidiary Tabacalera SA, which is a part of Altardis SA, purchased by Imperial in 2007. The Allied Cigar Corporation group is made up of all the assets of Tabacalera outside the US.
Imperial said that it plans to use the proceeds of the sale to reduce its debt, which at the end of 2019 stood at £12bn (US$15bn). The company said the premium cigar business delivered £80m (US$99m) in profits before tax in the financial year ended 30 September 2019.
The deal, which is subject to regulatory approval is, expected to close in the third quarter of this year.
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