Imperial Brands, plc issued a new statement today regarding the sale of its premium cigar divisions: negotiations are ongoing.
In an announcement today, which largely dealt with a financial downgrade to lower performance from its e-cigarette and vaping products, the company updated investors on where it was with the proposed sale of its premium cigar division:
Negotiations on the potential divestment of our Premium Cigar Division remain ongoing. We continue to consider the potential divestment of other non-core operations.
That language is noticeably different than where it was three months ago.
At that time, Alison Cooper, then ceo of Imperial, said:
We are exiting or divesting these assets, including our premium cigar business, to create further value for our shareholders and to simplify the structure of the business, creating a leaner, more agile organisation.
And Mark Williamson, then chairman of the board, said:
We have identified a number of assets that are not central to our growth strategy, including our premium cigar business which is in the process of being sold as part of a divestment programme that will realise up to £2 billion by May 2020. The Board will make a decision at that time regarding the most appropriate use of the proceeds.
Imperial is notably now saying that “negotiations” are “ongoing” and has dropped language regarding the planned deadline for the full divestiture program, May 2020, and other terms like “advanced stage,” which is how the sale was described last fall.
Imperial announced its plans to sell its cigar assets last spring. Those include:
- Altadis U.S.A. — The company behind Montecristo, Romeo y Julieta and others in the U.S.
- Casa de Montecristo — A chain of high-end retail stores, some owned by Imperial and others owned by franchise operators.
- Flor de Copan — A cigar factory in Honduras.
- 50 percent stake in Habanos S.A. — A joint-venture with the Cuban tobacco monopoly in the company that controls the sales and marketing of Cuban cigars worldwide.
- JR Cigar — The second-largest cigar retailer in the world.
- Tabacalera de García — The world’s largest cigar factory.
- Stakes in local Habanos distributors around the world.
Analysts at Jefferies estimated at the time that Imperial could generate $1.3-2 billion from the sale of the premium business.
In August, Imperial publicly announced that it expected the sale to be completed within three months. In November, after the three months had gone by, Williamson and Cooper provided the aforementioned statements, but no sale was announced.
halfwheel reported that Huabao International, a Chinese tobacco and cosmetics company, was the final bidder and was in the process of purchasing the company. Imperial declined to comment on Huabao as the buyer, but shortly after that our sources began telling us conflicting things.
As I wrote about in December, it seems likely that the deal with Huabao, or at least whatever one was being negotiated in the fall, is dead. It remains unclear who Imperial is still negotiating with, but given the change in language, it seems likely the sale is not close.