Altria buys cigar maker
Cigarettes are out. Cigars are in.
That’s at least according to Altria, which on Thursday agreed to spend $2.9 billion cash for John Middleton, maker of large, machine-made cigars.
With cigarette consumption steadily declining in the U.S., Altria has looked for products, such as cigars and smokeless tobacco, to replace those losses. Altria Group owns Philip Morris USA, maker of brands like Marlboro, Virginia Slims, Parliament and Basic, and started earlier this year to use its recognizable Marlboro brand to test market smokeless products in the Dallas/Fort Worth and Atlanta metropolitan areas.
“It fits squarely with our announced strategy to grow our U.S. tobacco business beyond cigarettes and complements our recent initiatives in the smokeless category,” Philip Morris USA chief executive Michael Szymanczyk said in a statement. In the third quarter, domestic cigarette volume declined 3 percent to 4 percent.
In the deal to buy John Middleton Inc., maker of Black & Mild cigars, Altria Group Inc. said the purchase price includes about $700 million in tax benefits. Excluding those benefits, the acquisition is valued at $2.2 billion.
The company said it will finance the deal with existing cash. Altria is buying John Middleton from privately held Bradford Holdings.
Source: Wilkes Barre Times-Leader