Imperial Brands PLC sold its worldwide premium cigar businesses to two individual private investment firms for €1.23 billion (US$1.338 billion). The sale includes a 50% stake in Habanos, the official exporter of the Cuban state-owned tobacco company Cubatabaco, which includes rights to sell prestigious cigar brands such as Cohiba, Montecristo, and Romeo y Julieta in 150 countries.
“We are delighted to be able to announce the sale of premium cigars in the current challenging global environment,” said joint interim chief executives Dominic Brisby and Joerg Biebernick.” It has been a complex transaction involving joint venture partners and assets across multiple geographies and we would like to thank everyone involved for working so hard to get the deal agreed.”
The sale will take place in two transactions: one for the US business and another for the “rest of the world” business. Gemstone Investment Holding Ltd will acquire the US premium cigar business for €185 million and Allied Cigar Corporation acquires the rest of the world for €1.040 billion.
“We believe we have found the right long-term owners for premium cigars; they are committed to investing in the business to maximize future growth opportunities and are well positioned to further develop operations internationally,” said Brisby and Biebernick.
The transactions are expected to close in the third quarter of calendar year 2020. The Allied Cigar purchase includes the sale of the Dominican Republic handmade premium cigar factory which is expected to close in 2021.
Imperial says the sale will proceeds will be used to reduce debt. Some speculated that the sale was forced by the current economic client where the growth in premium cigars such as those offered by Habanos, has faced a downturn in sales especially with high-end consumers in China.