Danish tobacco giant STG acquires Mac Baren Tobacco for $76.7 million to strengthen global market position

Danish tobacco giant STG acquires Mac Baren Tobacco for $76.7 million to strengthen global market position

Denmark's Scandinavian Tobacco Group (STG) announced that it has reached an agreement with Halberg to acquire Mac Baren Tobacco Company for DKK 535 million (approximately US$76.7 million). The transaction, which will be financed through cash and debt, is expected to significantly enhance STG's global pipe tobacco market position and increase the group's profit margins and shareholder value when fully integrated.

On June 27, Denmark's Scandinavian Tobacco Group (STG) issued a statement on its official website stating that it had reached an agreement with Halberg to acquire its Mac Baren Tobacco company (Mac Baren Tobacco). Co.) all shares subject to terms and conditions.

The transaction is valued at DKK 535 million (approximately USD 76.7 million) on a debt-free and cash basis. The acquisition will be financed with a combination of cash and debt.

Mac Baren Tobacco Company is a family-owned company founded in 1826. Its portfolio includes pipe tobacco brands such as Mac Baren, Amphora and Holger Danske, as well as fine-cut tobacco brands such as Amsterdamer, Choice and Opal. The company also produces and sells ACE and GRITT Branded nicotine bags.

Mac Baren's products are sold in 74 countries, with the majority of net sales generated primarily in the United States, Denmark and Germany, with other key markets including the United Kingdom, France, Spain and Italy. The company is headquartered in Svendborg, Denmark, and has production bases in Denmark and Richmond, Virginia, the United States. The company currently has approximately 200 full-time employees.

According to the report, Mac Baren's annual net sales in April 2024 reached DKK 723 million ($103 million), while it reported EBITDA (earnings before interest, taxes, depreciation, and amortization) of DKK 85 million. The nicotine pouch business contributed nearly 20% to net sales but contributed slightly to EBITDA at a loss.

STG CEO Niels Frederiksen said:

"I am pleased that we have taken an important step in strengthening our smoking tobacco business with the acquisition of Mac Baren. This acquisition will strengthen our already established position in the global pipe tobacco market and will expand our most attractive products for consumers." "

Torben Sørensen, Chairman of the Board of Directors of Halberg A/S, said:

"Scandinavian Tobacco Group is acquiring a strong company with extensive expertise, beloved brands and skilled employees. Since its founding in 1826, Mac Baren's core DNA has been to focus on new opportunities and ensuring optimal competitiveness. Given this, it is a wise move for the company to now remain in Danish hands, which is particularly pleasing for Mac Baren and Halberg. are the best solutions."

STG said full-year 2024 financial guidance, excluding the impact of the Mac Baren Tobacco acquisition, remains unchanged. The financial impact of the acquisition will be announced immediately upon completion of the integration planning period. The integration planning period is expected to take up to 120 days. When fully integrated, the transaction is expected to be accretive to the group's margins, earnings per share and return on investment. If the deal closes, the group's leverage (net interest-bearing debt/EBITDA) will temporarily exceed the target leverage of 2.5x. The transaction will not affect a pending share buyback program of up to DKK 850 million ($120 million).