STOCKHOLM, Sept. 14, 2021 /PRNewswire/ -- Swedish Match
today announced that it intends to separate its cigar business via
a spin-off to shareholders and to completely exit the manufacturing
of combustible tobacco products. Swedish Match has initiated
preparations for a separation and a subsequent listing on a major
US securities exchange, with a final decision on execution subject
to various considerations. The separation is expected to be
completed during the second half of 2022, at the earliest.
For more than 20 years, Swedish Match has been a pioneer in the
transformation of its business model away from combustible tobacco,
starting with the divestiture of its cigarette business in 1999,
and later with its divestitures of pipe tobacco, premium cigars,
and its non-US machine made cigar business. After conducting a
thorough strategic review of its businesses, today's announcement
of the planned separation of the US cigar business marks the next
chapter in this transformation, where smokefree products such as
nicotine pouches and snus will play the leading role in building a
stronger Swedish Match in line with societal trends. The intended
separation of the cigar business provides even greater focus on
building Swedish Match's presence in the growing modern oral
category, while also providing opportunities and greater
flexibility for the stand-alone cigar business to execute its own
strategic plans toward delivering strong value as an independent
company. As a stand-alone company, the cigar business will be able
to explore a broader scope of growth opportunities, and to optimize
its operational set-up and capital structure, among other
benefits.
The cigar business has solid positions in both the natural leaf
and homogenized tobacco leaf (HTL) segments of the US mass market
cigars category and holds the number two market position with
approximately 23 percent of the market measured by number of
sticks1). Since 2015, volumes have grown at a
compounded annual rate of close to 10 percent from more than 1.2
billion sticks to more than 1.9 billion sticks in 2020, driven by
robust growth for natural leaf varieties. During the same period,
revenues have also grown by close to 10 percent on a compounded
annual basis from 313 to 493 MUSD, while operating profit has grown
by 54 percent to 195 MUSD. During the first six months of 2021,
compared to the same period of 2020 and measured in local currency,
sales grew by 25 percent as a result of improved pricing and
double-digit volume growth and operating profit increased by 44
percent.
The natural leaf cigar portfolio includes such iconic brands as
Garcia y Vega, Game, and 1882, while its
White Owl brand of HTL cigars is recognized nationwide for
its quality and heritage. Its portfolios of both non-flavored and
flavored cigars are among the broadest in the industry. The
business has efficient and modern manufacturing presence in both
the US and in the Dominican
Republic.
In addition to its cigar business Swedish Match operates
its Smokefree and Lights product segments. For the full
year 2020, the Smokefree and Lights product segments reported
combined revenues of 11,799 MSEK (10,115) and combined operating
profit of 5,364 MSEK (4,235). Measured in constant currencies,
sales and operating profit for these segments combined grew by 21
and 32 percent respectively for the full year 2020. For the first
six months of 2021, these segments combined reported revenues of
6,404 MSEK (5,787) and operating profit of 3,062 MSEK (2,574).
Measured in constant currencies, sales and operating profit for
these segments combined grew by 20 and 30 percent, respectively,
during the six-month period. Growth continued to be driven by the
strong momentum for nicotine pouches. In the US, the ZYN
brand of nicotine pouches is the clear market leader and has
enjoyed tremendous growth, with volumes exceeding 140 million cans
for the twelve-month period ending June
30, 2021.
Lars Dahlgren, President and CEO
of Swedish Match says: "This announcement is another milestone
toward achievement of our aspiration to become an entirely
smokefree organization with a clear leadership position in oral
reduced risk products, including ZYN, the largest modern
oral brand in the US and globally. The cigar business continues to
perform very well and is seeing positive industry dynamics, which
we believe will make it an attractive stand-alone company,
balancing strong cash flow generation with attractive growth.
The new cigar company will have the ability to explore a wider
scope of growth opportunities within its autonomous and focused
strategic agenda and to establish efficient and tailored
operational and legal structures, geared for long-term value
creation. Subject to market conditions, we expect that
the new stand-alone cigar business, with its strong cash flow
profile, could be capitalized at a higher level of leverage than
has been the case for Swedish Match historically, which would
create the opportunity for Swedish Match to use financing proceeds
upon separation to further enhance shareholder returns. Until a
separation is complete, Swedish Match will continue to operate as a
single company and will continue business as usual for our
customers and employees."
Swedish Match expects to conclude the intended separation in the
second half of 2022, at the earliest. Following the potential
separation of the cigar business into a new stand-alone
company, Swedish Match expects to provide commercial and
administrative support to the new stand-alone entity during a
transitional period. The completion of the intended
separation, the resulting structures, and other related
considerations are subject to final board and shareholder
approvals, a thorough review of market and other business
conditions, required documentation, and other customary and
necessary approvals and consultations.
Goldman Sachs is acting as exclusive financial advisor to
Swedish Match on the intended spin-off of its cigar business.
1) Based on MSA distributor shipments of mass market cigars
(excluding little cigars).
CONTACT:
Contacts:
Lars Dahlgren, President and
Chief Executive Officer
Phone +46 8 658 0441
Anders Larsson, Chief Financial
Officer and Senior Vice President Group Finance
Phone +46 10 139 3006
Emmett Harrison, Senior Vice
President Investor Relations
Phone +46 70 938 0173
___________
This information is information that Swedish Match AB (publ) is
obliged to make public pursuant to the EU Market Abuse Regulation.
The information was submitted for publication, through the agency
of the contact person set out above, at 6.00
p.m. CET on September 14,
2021.
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Swedish Match press
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SOURCE Swedish Match