Scandinavian Tobacco Group (STG) has announced plans to the Dutch-based Royal Agio Cigars in a deal valued at €210 million ($232.61 million).

Formally, the deal is to acquired Agio Beheer B.V. from Highlands Beheer B.V. It includes Agio’s core business—little cigars sold under the Panter and Mehari’s brand—as well as large cigars sold under the Balmoral name. The announcement says Agio generated €133 million ($147.32) in revenue in 2018 with an EBITDA of €18 million ($19.94 million).

While the two companies have agreed to the deal, it will need to be approved by both governments as well as works councils, a form of union. It is expected to be completed in the first half of 2020.

“I am very pleased and proud that we have taken this important step towards an acquisition of Royal Agio,” said Niels Frederiksen, ceo of STG, in a press release. “If completed, the acquisition will be an important step in our ambition of becoming the global leader in cigars, as it significantly strengthens our position in several key machine-made cigar markets in Europe and enables us to deliver an attractive range of cigars of the highest standards to our consumers.”

STG says that it expects the deal to be EPS accretive, i.e. positive to the shareholders, by the second year after completion. It will be financed by cash and debt.

Royal Agio was founded in 1904 by Jacques Wintermans in Duizel, The Netherlands. Up until today’s announced sale, the company is still owned by the Wintermans family and still has a presence in Duizel. It also has manufacturing in Westerlo, Belgium, Colombo Sri Lanka and San Pedro, Dominican Republic.

Its premium cigar business is relatively young. Agio took over its own U.S. distribution in late 2017 after a three-year partnership with Drew Estate, which distributed its cigars in the U.S.

In Europe, where Agio is much stronger, the company distributes Drew Estate and La Flor Dominicana in select markets.

STG owns General Cigar Co.—one of the largest U.S. cigar companies with brands like Macanudo, Cohiba and CAO—as well as retailers Cigars International and Thompson Cigar Co., and a variety of other tobacco businesses like machine-made cigars, snuff and pipe tobacco.

The company’s stock price has been struggling for the last year; it was down 1 percent following today’s announcement.

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Charlie Minato

I am an editor and co-founder of 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.