NEW YORK (AP) _ General Cigar Holdings Inc. is selling its mass-market cigar business that includes brands like White Owl and Tiparillo to the Swedish cigar maker Swedish Match AB for $200 million in cash.
Included in the sale announced today are two General Cigar manufacturing plants in Dothan, Ala., and Santiago, Dominican Republic.
The hundreds of employees at both plants are expected to continue to have jobs after Swedish Match takes control, said Edgar Cullman Jr., the chief executive of General Cigar.
General Cigar officials said the sale will allow the company to focus on its larger premium cigar business which includes brands like Macanudo, Partagas and Punch. It plans to use proceeds from the sale to reduce debt and make investments or buy other premium cigar businesses.
News of the deal helped shares of both companies. General Cigar was up 37 1/2 cents a share at $9.87 1/2 a share in midday dealings on the New York Stock Exchange, while the U.S. stock of Swedish Match gained 87 1/2 cents a share to $33.62 1/2 on the Nasdaq Stock Market.
As part of the agreement, New York-based General Cigar will continue to supply tobacco to Swedish Match for the brands being sold. The brands being sold also include Garcia y Vega and Tijuana Smalls.
Swedish Match’s sales force, meanwhile, will start selling some General Cigar premium brands in the United States.
Swedish Match said the purchase will complement its existing operations in the U.S. cigar business. Swedish Match also makes matches and lighters sold in 140 countries. It is based in Stockholm.
The deal is subject to approval by regulators but is expected to close by the end of April, the companies said in a joint statement.