Pitch Best Mid-Market Deal 2019: Scandinavian Tobacco Group – Royal Agio Cigars
De beste deal van het jaar is meer dan het hoogste cijfertje in de krant en de kunst van het dealmaken is meer dan het opstellen van een contract. De Awards voor de beste deal zou dus niet alleen op de prijs van de deal gebaseerd moeten zijn, maar vooral op de – toegevoegde – waarde voor een bedrijf en de exit.
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Name of the deal: Scandinavian Tobacco Group acquires Royal Agio Cigars.
Date announced: 16th of September 2019
Published value: €210 million
Buyer: Scandinavian Tobacco Group
Target: Royal Agio Cigars
Seller: Wintermans family
M&A Database: Bekijk de details van deze deal.
Involved firms and advisors sell side:
M&A: Rothschild – Bastiaan Vaandrager, Sander Griffejoen, Philip Prompers, Jeroen Slaghekke, Derk Bottema.
FDD: PwC – Remco van Daal.
Tax: PwC – Bart Weijers, Laura Grosscurt, Korneel de Ruiter.
Involved firms and advisors target:
Legal: Allen & Overy – Karine Kodde, Gijs Linse, Jeroen Streefkerk.
Involved firms and advisors buy side:
M&A: PwC – Istvan Csejtei, Onno de Groot
FDD: PwC – Remco van Daal.
Tax: PwC – Bart Weijers, Laura Grosscurt, Korneel de Ruiter.
Legal: Van Doorne – Hugo Reumkens, Marjolijn Lips, Ben Wekker
Tax: KPMG Meijburg & Co – Harold Kluijtmans, Carlet Stubenrouch en Özgür Kara
Pitch
Brief description deal / Deal outline:
Scandinavian Tobacco Group, a Denmark-based producer of cigars and tobacco products, has acquired Royal Agio Cigars, a Dutch producer of cigars. Royal Agio Cigars employs approximately 3200 people. The company realized a revenue of €133 million in 2018 with a profit of €18 million.
- The Enterprise value of €210m represents 12.0x FY18 EBITDA.
- Royal Agio Cigars is a leading European producer and distributor of cigars and cigarillos founded in 1904 by the Wintermans Family. Royal Agio Cigars' products are sold in approximately 90 countries and the company has strong market positions in The Netherlands, Belgium, France, Germany, Italy and Spain. Royal Agio Cigars’ main brands include Balmoral, Mehari´s and Panter.
- Scandinavian Tobacco Group is a world leading manufacturer of cigars and pipe tobacco with annual production of three billion cigars and 5,000 tonnes of pipe and fine-cut tobacco. Scandinavian Tobacco Group holds market-leading positions in several categories and has a portfolio of more than 200 brands providing a complementary range of established global brands and local champions.
- Scandinavian Tobacco Group will finance the acquisition from cash at hand and debt.
- The transaction is expected to complete by H1 2020, subject to obtaining required approval from competition authorities and completion of the employee consultation process in the Netherlands.
Deal rationale:
- Royal Agio Cigars provides Scandinavian Tobacco Group with strong cigar brands including Mehari´s, Panter and Balmoral and important positions in the key European machine-made cigar markets of France, Belgium, The Netherlands, Germany, Italy and Spain.
- The acquisition will be an important step in Scandinavian Tobacco Group’s ambition of becoming the global leader in cigars, as it significantly strengthens their position in several key machine-made cigar markets in Europe and enables them to deliver an attractive range of cigars of the highest standards to its consumers
- Royal Agio Cigars will be able to benefit from the experience and distribution networks of Scandinavian Tobacco Group in the US market, to which Agio recently has strengthened its commitment
- Combined with Scandinavian Tobacco Group, Royal Agio Cigars will be more resilient to legislative and regulatory headwinds.
What is the impact of this deal for the company?
- Scandinavian Tobacco Group has acquired all the shares of Royal Agio Cigars. Following the transaction, Royal Agio Cigars will be integrated in the group, creating a global powerhouse in the cigar industry. Pro-forma 2018 net sales for the combined group are c. €1.0bn with a combined workforce of over 10,000 employees.
- The combination of the two companies will be in a better position to deal with the financial consequences of ever-increasing legislation and regulations in the sector.
What is the impact of this deal for the direct stakeholders?
- Post-transaction, Royal Agio Cigars will be absorbed by Scandinavian Tobacco Group and its employees will become part of the workforce of the Danish manufacturer of cigars and pipe tobacco.
- Royal Agio Cigars was founded by Jacques Wintermans and now is run by fourth-generation family member Boris Wintermans. Boris Wintermans stated the following: “the transaction is in the interest of long-term continuity of the activities and the brands of the family-owned business. We carry responsibility for the continuity of Agio and consider our decision to be inevitable in the long term”.
- The transaction is expected to be value accretive for both seller and buyer
What is the impact of this deal on the society?
- The combination of Scandinavian Tobacco Group and Royal Agio Cigars will provide customers in multiple geographic regions with a broader product offering through the cross-selling of some of the companies’ key brands.
- In addition, the transaction ensures the continuity of the activities and brands of a fourth-generation ran family company.
Why does this deal deserve a nomination?
- A competitive multiple being achieved for a business in a low growth sector.
- In a time of industry headwinds, the transaction is expected to be value accretive for both seller and buyer .
Comments Panel of judges:
Een waanzinnig mooie multiple voor de familie Wintermans, daar was iedereen het over eens. Dat in een krimpende markt voor rookwaren – niet in de laatste plaats door een uitstervend klantenbestand – nog zo’n prijs onderhandeld is! Ook is de transactie technisch interessant, omdat het gaat om een cross-border deal vanuit een familiesituatie. Deze deal scoorde erg hoog op emotie, historie en waardering. Of het bedrijf er zelf beter van wordt is nog maar de vraag en de jury had moeite met het argument in de pitch dat de grotere sigarengroep sterker kon lobbyen tegen de verstrengende rookwetgeving – een mogelijk maatschappelijk ongewenst effect van de fusie.
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