logo
















logo

logo

logo

logo

logo

logo

logo

logo

logo

logo

logo

logo

logo

logo

logo
April,
2007

TOBACCO INDUSTRY NEWS
Production, Distribution, Regulation, Trade...

Altadis S.A. Becomes Target of Takeover Bid
Rejects Imperial Tobacco Offer; BAT, Others May Enter Fray


Madrid - The Franco-Spanish tobacco group Altadis S.A. has rejected a takeover bid from Imperial Tobacco of Britain, saying the unsolicited offer of $15.3 billion on March 15 was too low.

Altadis S.A. is the leading producer of premium cigars worldwide and is the parent company of Ft. Lauderdale-based Altadis U.S.A. It also holds a 50 percent stake in Cuba’s Habanos S.A.

“The board, in conjunction with its financial and legal advisors, has carefully considered this approach and has unanimously rejected it, on the grounds that it does not reflect the strategic value of the company and its unique and diversified assets, as well as their future growth prospects,” Altadis said in a statement.

At least three European private equity firms are also interested in a buyout deal with Altadis, according to European media, as well as a possible counter-offer by British American Tobacco plc. While Imperial Tobacco is expected to raise its offer if it can secure a recommendation for a revised offer from Altadis’s board, Imperial itself is said to be a possible — if remote — takeover target by Altria Group Inc., the U.S. based owner of Philip Morris. Imperial has been widely viewed as the last major potential acquisition for Altadis that would be free of anti-trust issues.

A combination of Imperial and Altadis would bring together the fourth and fifth largest tobacco groups in the world behind Altria, B.A.T., and Japan Tobacco.

In 2006, 43% of Altadis S.A.’s sales were in cigarettes; 30% in logistics; 22% in cigars; and 5% in other segments.

Analysts believe that any deal with Imperial or BAT would likely see the companies keep the majority of Altadis’s cigarette and cigar brands, but sell its separately listed distribution business.

Altadis’s interest in the Cuban cigar maker Habanos S.A. could be in jeopardy if a sale offer was accepted, however. El Economista has reported that the Cuban government may exercise an option to take full control of its cigar joint venture with Altadis S.A. if the company is acquired by Imperial Tobacco Group PLC, Altadis and the Cuban state each hold 50 pct stakes in Corporacion Habanos, maker of trophy Cuban cigar brands such as Montecristo, Cohiba and Romeo y Julieta.

According to El Economista, the Cuban government has the option to retain Corporacion Habanos in the event of a change in Altadis’ ownership and would seek to avoid partnership with a U.K. company.


Imperial Tobacco Purchases Commonwealth Brands

Louisville, KY - British tobacco manufacturer Imperial Tobacco Group PLC has acquired Kentucky-based Commonwealth Brands from Houchens Industries, Inc. in a $1.9 billion deal. Commonwealth, the fourth-largest cigarette producer in the United States, produces discount brands USA Gold and Sonoma and has an estimated 3.7 percent share of the market.

Gareth Davis, chief executive officer of Imperial, said his company plans to develop and grow its business in the U.S., launch additional brands.

Although Imperial already has a presence in the U.S. market through its New Jersey-based Robert Burton Associates subsidiary, which sells cigarette papers and tubes, the Commonwealth acquisition marks the company’s first foray into the U.S. cigarette segment.

Based in Bristol, England, Imperial produces Regal, Lambert & Butler, and Davidoff, brands and sold 187 billion cigarettes in more than 130 countries in the fiscal year ending last September.


Retailer Pleads No Contest to Felony Charges of Counterfeiting Altadis Cigar Trademark

Sacramento, CA - Allen Boyd, manager of Carolina Cigar Co. in Fort Lauderdale, Fla., has entered a no contest plea to a third degree felony charge of selling counterfeit cigars. Boyd was arrested on February 7, 2006 by the Broward Sheriff’s Office for selling so-called “Cuban replica” counterfeit Montecristo cigars. In the United States, the Montecristo trademark is owned by Altadis U.S.A., which described the conviction as an important victory in its ongoing efforts to halt cigar counterfeiting.

“Protecting brand names and trade designs is critical, particularly those that have established a loyal following like Montecristo and our other famous brands,” said Theo Folz, president and c.e.o. of Altadis U.S.A.

Altadis has been vigilant in enforcing its trademark rights, actively working with state and federal law enforcement officials to secure criminal prosecution of violators and using anti-counterfeiting laws to secure criminal convictions of counterfeiters. The company also works with U.S. Customs to arrange for the seizure and destruction of counterfeit cigar shipments.


Nat Sherman Goes 100% “Fire-Safe” with All Brands:
Full Product Line is Now LIP-Compliant Nationwide


New York, NY - Nat Sherman has announced that all of its cigarette brands sold nationwide now meet the Low-Ignition Propensity (LIP), or so-called “fire-safe” standards adopted as mandatory by a number of states, including New York, Vermont, and California.

Joel Sherman, president of Nat Sherman, says, “Since many states are moving in the direction of mandatory standards our decision was intended to simplify inventory management and eliminate the risk of shipment violations for our customers who distribute our brands in multiple states, some of which may have mandatory standards and some without.”

LIP cigarettes use a special paper that reduces the propensity of the cigarette to continue burning when left unattended. Sherman echoes other cigarette manufacturers in cautioning that the commonly-used term “fire-safe” can be misleading. “Anything that burns is capable of starting a fire and must be handled carefully,” he notes. “Smokers should not be led to believe that low-ignition propensity cigarettes are incapable of starting a fire.” Sherman notes that none of the major tobacco companies sell LIP-compliant cigarettes nationwide. “All of them instead assert they want a national standard mandated by the federal government that, they claim, would reduce the possibility of conflicting state standards,” he says. “However, all of the state standards adopted thus far are similar and are based on model legislation developed by the Coalition for Fire-Safe Cigarettes., a group of nearly fifty health and fire fighting organization headed by the National Fire Protection Association.


New Image Global Adds Distribution Center

Corona, CA - New Image Global, Inc. has opened a new distribution facility in Jacksonville, Fla., enabling the tobacco manufacturer to turn-around orders in a single day, cut delivery times in half, and back its product freshness guarantees.

“This new, professionally-staffed, state-of-the-art facility does wonders for our productivity,” says New Image Global’s c.f.o., Lanz Alexander. He adds that the new facility will better serve distributors who regularly stock the company’s entire range of brands, which include Royal Blunts EZ Roll Tubes, True Blunt, EZ Duz It Cigarillos, Eastwood A’naturale RYO Wraps, and its recently-launched Exotic Wet Mango Energy Drink.


The Cigar Agency Adds New Jersey Coverage

Nashua, NH - The Cigar Agency, a tobacco merchandise representation and marketing firm, has announced that as of March 2007 its territory now includes the “Garden State” of New Jersey. Founded in April 2006 by former Ashton Distributors rep Victor Vitale, the Nashua, N.H.-based firm now has five full-time sales agents serving retail tobacco shop accounts.

“Our new agent — Rich Rodenhaus — will be managing The Cigar Agency clients in New Jersey,” says Vitale.

With this expansion, the company now has sales agents present in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, and New York.

“In addition to much positive reception from our retail dealers, our manufacturers — which include Cusano, Rocky Patel, Jose Pepin Garcia, Padilla, Palio, and Noro — are extremely pleased with the results of our performance in our original territory (New York and New Hampshire),” says Vitale. “Our primary goal is to systematically increase and solidify the represented brands’ market share and awareness wherever The Cigar Agency works.”

Tobacconists may speak with sales agent and coordinator Heidi Brueckner for information on The Cigar Agency’s retail dealer services and to find out about a Cigar Agency in-store event or consult the company’s web site for the latest information on its products and progress.

Vitale adds that the company will also be adding territories in Pennsylvania, Delaware, and Maryland in the near future.

The Cigar Agency, Toll-free: (888) 48-CIGAR, Web: www.CigarAgency.com.


TMA Conference to Address Evidence-Based Science and Tobacco Harm Reduction

Princeton, NJ - Public health and tobacco industry scientists and government affairs personnel will discuss Evidence-based Science and Tobacco Harm Reduction on May 7th and 8th at the Tobacco Merchants Association’s (TMA) 92nd annual meeting and conference in Williamsburg, Va.. It is TMA’s second conference devoted to the discussion of these important issues. It will be taking place against the backdrop of proposed Federal legislation mandating FDA regulation of the tobacco industry.

TMA president Farrell Delman said representatives from several cigarette and smokeless manufacturers will present their evaluation models for determining risks across and within tobacco product categories. “Renowned public health scientists such as Dr. Stephen Rennard of the University of Nebraska Medical Center, Dr. Jonathan Foulds head of the Tobacco Dependence Program at New Jersey’s University of Medicine and Dentistry, and others will present their views on the model’s usefulness in assessing the relative harmfulness of tobacco products,” said Delman.

Experts will also address other timely industry issues such as the proposed Federal redefinition of little cigars; whether U.S. states should tax smokeless tobacco on a weight or value basis; world leaf supply and demand; and TMA’s new government-industry database of all those licensed in the U.S. to sell tobacco products from import and manufacture through retail. A panel of top securities analysts including Bonnie Herzog of Citigroup, Nik Modi of UBS, Ann Gurkin of Davenport, and Jayne Ross of Standard & Poors, will discuss the outlook for the tobacco industry in the U.S. and around the world.

TMA, Princeton, N.J., Tel: (609) 275-4900, Web: www.tma.org.



SMOKESHOP - April, 2007