Swedish Match’s cigar portfolio includes brands like White Owl, Garcia y Vega, Game and 1882. The company has manufacturing operations established in the U.S. and the Dominican Republic. Since 2015, the company’s cigar volumes have grown at a compounded annual rate close to 10 percent with more than 1.2 billion sticks to more than 1.9 billion sticks in 2020. This growth is attributed to growth and increased demand for natural leaf products. During this same timeframe, revenues have grown by close to 10 percent. The company has also experienced an increase in revenue from its smoke free and lights products, driven mostly by the populatity of its ZYN nicotine pouch product.
Lars Dahlgren, president and CEO of Swedish Match, issued the following statement about the planned spin-off of the company’s cigar business:
“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 U.S. 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.”
The separation between Swedish Match and its cigar business is set to conclude sometime in the later half of 2022. After that point, the cigar business will become a stand-alone company that Swedish Match will support with commercial and administrative support during what it is calling a “transitional period.” Goldman Sachs is serving as an exclusive financial advisor to Swedish Match during for this spin-off venture.
For all the latest news from Swedish Match, visit swedishmatch.com.