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Swedish Match firm buys US tobacco maker

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Swedish Match firm buys US tobacco maker
17:07 CET+01:00
A Danish company recently partially acquired by Swedish tobacco products maker Swedish Match has purchased a unit of American tobacco giant Reynolds American for $205 million.

Scandinavian Tobacco Group">Scandinavian Tobacco Group (STG), which is 49 percent owned by Swedish Match, will buy Lane, which makes a variety of tobacco products, including Kite and Bugler roll-your-own tobacco and Captain Black pipe tobacco.

"This is an opportunity to maximize the potential of the Lane business and brands under an owner who is focused on the 'other tobacco products' category," Susan M. Ivey, president and CEO of Reynolds American, said in a statement on Friday.

STG is the world's largest pipe tobacco manufacturer, shares the top position in sales of cigars internationally and is a leader in self-rolled tobacco products in Scandinavia.

Lane is expected to contribute $45 million in EBITDA, sales volumes of 525 tonnes of pipe tobacco, 980 tonnes of fine-cut tobacco and 450 million little cigars to STD.

With the acquisition of Lane, STG estimates its annual turnover will be about €800 million (7.18 billion kronor, $1.07 billion). It also estimates it will have sales volumes of more than 2.5 billion cigars, 2,175 tonnes of pipe tobacco, 3,170 tonnes of fine-cut tobacco, and 450 million little cigars.

The company have about 10,000 employees globally after the acquisition, which is subject to anti-trust review and approval by the US Federal Trade Commission. The deal is expected to close in the first half of 2011.

On October 1st, 2010, Swedish Match acquired 49 percent of STG and contributed its US premium and European cigar businesses, as well as its pipe tobacco businesses, to the new entity.

Stockholm-based Swedish Match makes snus, tobacco, both handmade and machine-made cigars, chewing tobacco, dipping tobacco, matches and lighters.

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