Swedish Match firm buys US tobacco maker

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.

Swedish Match firm buys US tobacco maker

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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EU to uphold export ban on Swedish snus

The European Commission plans to ban the flavoured snus that has becoming increasingly popular in Sweden in recent years, according to the final version of its proposed tobacco directive presented on Wednesday, which also calls for the current ban on snus exports to remain in place.

EU to uphold export ban on Swedish snus

“We are not banning smoking, we are making it less attractive,” EU Health Commissioner Tonio Borg said at a press conference in Brussels.

“Tobacco should look like tobacco and it should taste like tobacco,” he added.

He gave, as an example, cigarettes with added aromas such as orange and vanilla.

“This proposal ensures that attractive packaging and flavourings are not used as a marketing strategy,” Borg told assembled reporters.

Many Swedish snus manufacturers have added aromas in recent years. General brand snus has bergamot orange flavouring while Göteborgs Rapé has a taste of juniper berries.

Other new types of snus have been introduced recently which feature different types of mint, liquorice and eucalyptus flavours.

Borg also explained that there will be no easing of the export ban that Swedish snus producers have faced in the entire union since Sweden joined in the early 1990s.

For Swedish snus manufactuers, the Commission’s decision, while expected, nevertheless came as a disappointment.

“We regret that the current ban on snus exports is going to remain in place,” Patrik Hildingsson, spokesman with Swedish Match, told The Local.

Hildingsson said that it was “sad” that the Commission could so easily skirt core principles of the EU meant to ensure non-discrimination of products made and sold in members states.

“The Commission is picking winners and losers in the market,” he said, calling the extension of the snus export ban a “one-sided trade ban”.

“Other snus manufacturers in Europe are able to export to Sweden, but we can’t export to the rest of Europe,” said Hildingsson.

Snus is no laughing matter for Swedes, and as late as last week Trade Minister Ewa Björling threatened Brussels with “all out war” if they tried to ban it from Sweden.

She said the Commission must take medical research into consideration.

Some medical experts say the use of snus, which is placed under the top lip, explains the relatively low lung cancer rate of Swedish men who might otherwise be smoking cigarettes.

Borg, however, seemed to disagree.

“It is well known that snus has a negative impact on health. And the risk that snus is only the first step of tobacco consumption is significant,” he said at Wednesday’s press conference.

The new rules are meant to replace the Commission’s last tobacco directive from 2001. Directives entail that members states have to make sure that national law mirrors the guidelines set out in them.

It will have to be voted through by the European Parliament.

TT/David Landes

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