Imperial Brands, plc, the British tobacco company behind Blu e-cigarettes, John Player cigarettes and others has announced it intends to exit the premium cigar business.

While the company’s primary business is cigarettes, it is the largest global player in the premium cigar industry thanks to a wide range of assets including the world’s largest premium cigar factory, JR Cigar—the second largest U.S. retailer—the Casa de Montecristo chain, Altadis U.S.A. and a 50 percent stake in Habanos S.A., a joint venture with the Cuban government that is responsible for the global sales and marketing of Cuban cigars.

The company made the announcement to employees this morning and released a statement.

Imperial says that this is part of the £2 billion ($2.59 billion) divestment it announced last year. So far it has only raised £280 million ($362 million) or 14 percent, of the planned amount.

Analysts at Jefferies estimate that Imperial could generate $1.3-2 billion from the sale of the premium business. They also estimate that the premium cigar business generates $450 million in revenue and earns $111 million in profit annually.

“Premium Cigars has performed well over a number of years with good revenue and profit growth; however, it is a unique luxury business with a different consumer base and route to market relative to Imperial’s other businesses,” said the statement. “The sale of the business provides an attractive opportunity to realise shareholder value.”

In addition to the aforementioned companies, Imperial owns stakes in most—if not all—local Cuban cigar distributors, that includes:

  • 27.5 percent of 5th Avenue Products Trading GmbH
  • 25 percent of Caribbean Cigars Corporation NV
  • 50 percent of Coprovoa SAS
  • 50 percent of Cuba Cigar S.L.
  • 50 percent of Cubacigar Benelux N.V.
  • 30 percent of Diadema Spa
  • 50 percent of Habanos Nordic AB
  • 25 percent of Havana House
  • 25 percent of Hunters & Frankau
  • 50 percent of Infifon Hong Kong Limited
  • 25 percent of Maori Tabacs S.A.
  • 25 percent of Pacific Cigar Co. (Various)
  • 25 percent of Phoenicia TAA Cyprus Ltd

The company also has a joint partnership in the Flor de Copan factory in Honduras.

Imperial says it is being advised by AZ Capital on the sale.

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Charlie Minato

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.