James Foster
The Old K&P Factory
While it’s not late-breaking news at this point about the purchase of Peterson pipes by Laudisi, and the Peterson tobacco line to Scandinavian Tobacco. I did feel it was important to talk to the stakeholders about what the future holds. So strap yourself in as I had a chance to talk to Joshua Burgess (Managing Director, Laudisi Ireland), Leonard Wortzel (VP of Marketing and Product Dev at Scandinavian Tobacco Group/Lane Ltd), AND the man, the myth, the Peterson book author, and walking Peterson encyclopedia - Mark Irwin. Additionally, Conor Palmer chimed in briefly and answered a couple questions.

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Scandinavian Tobacco Group is Now the World’s Largest Pipe Tobacco Company.

Swedish Match and Skandinavisk Holding / Scandinavian Tobacco have completed their merger to become the world’s largest pipe tobacco company. Some of the pipe tobacco brands falling under the new Scandinavian Tobacco Group umbrella include; Dunhill, Balkan Sasieni, Escudo, Orlik, W.Ø. Larsen, CAO, Borkum Riff, Erinmore and Half & Half as well as many others. Stanwell Pipes are also part of the company.

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Two Luxury Tobacco Giants Talk Merger
    February 4th, 2010

If you smoke Stanwell Pipes, or Erinmore, Clan, W.Ø. Larsen or CAO pipe tobacco, you may not know that they all come from the same parent company, Scandinavian Tobacco Group A/S.

STG has signed a letter of intent with Swedish Match to form a worldwide company with focus on cigars and pipe tobacco.

In addition to many of the top cigar brands, Swedish Match also makes Borkum Riff and Half&Half pipe tobaccos.

• Scandinavian Tobacco Group (STG) – formerly named Skandinavisk Tobakskompagni - will contribute all its tobacco business (cigars, pipe tobacco and fine cut tobacco)
• Swedish Match (SM) will contribute all its cigar business (with the exception of US mass market cigars), as well as its pipe tobacco and accessories business
• Completion of the transaction is subject to due diligence by both parties, final transaction agreements, bondholder approval, and regulatory review and approval

In accordance with its strategic vision to become a world leader in cigars and a leading player in smoking tobacco, STG has signed a letter of intent with SM to form a company combining the tobacco business of STG with the cigars businesses of SM (with the exception of SM’s US mass market cigar business). The company will also include the pipe tobacco and accessories business of SM, as well as distribution of lighters and matches in relevant markets.

The combined entity will have an annual turnover of just under MEUR 700 and a combined volume of more than 2.5 billion cigars and 1,650 tons of pipe tobacco, placing it firmly as one of the largest cigar companies in the world and as world leader in pipe tobacco. The company will have leading positions in the markets for premium cigars in the US and for cigars in Europe, and hold strong positions in a number of other markets. Its leading cigar brands will include brands such as Café Crème, Henri Wintermans, Colts and Mercator, among others, from STG, with SM contributing brands such as Macanudo, Partagas (US), Punch (US) and La Paz. Its leading pipe tobacco brands will include Erinmore, Clan and W.Ø. Larsen from STG and Borkum Riff and Half&Half from SM.

STG will hold 51% of the shares in the new company, with the remaining 49% of the shares being held by SM. On the basis of the preliminary valuations, which are subject to due diligence by both parties, STG will compensate SM by approximately MEUR 40 to account for the planned shareholding and the relative differences in enterprise values on a debt and cash free basis. Anders Colding Friis, CEO of STG, will become CEO of the new company.

SM produces and sells market-leading brands in smoke-free tobacco products, cigars, lighters and matches. SM’s global operations generated sales of MSEK 14,139 for the twelve months period ending September 30, 2009. It has production units in 10 countries and the SM share is listed on the NASDAQ OMX in Stockholm.

"The Letter of Intent marks the intention of both parties to form a value enhancing business combination within the cigar and smoking tobacco industry. Such a business combination would be complementary, create synergies and result in an overall stronger company," says Anders Colding Friis, CEO of Scandinavian Tobacco Group.

Completion of the transaction is subject to due diligence by both parties, final transaction agreements, as well as bondholder and regulatory approvals. Signing is expected during the first half of 2010 and completion as soon as possible thereafter. Please note that there can be no assurance that the transaction will be completed.

Scandinavian Tobacco Group produces and sells cigars, pipe tobacco and fine cut tobacco in more than 115 countries around the world. The group has around 3,400 employees and is headquartered in Denmark. The products are sold via sales subsidiaries in Europe, Canada and the US and a network of distributors. Production facilities are located in Denmark, the Netherlands, Belgium, Indonesia, Dominican Republic, Honduras and Nicaragua. Key cigar brands are Café Crème, Henri Wintermans, Colts and Mercator. The most important pipe tobacco brands are Erinmore, Clan, W.Ø. Larsen and Stanwell. Key fine cut brands are Escort, Tiedemanns and Crossroad.