Jump to full article: Imperial Tobacco (uk), 2007-02-08
Intro: Imperial Tobacco Group PLC today announced that it has agreed to acquire 100 per cent of CBHC Inc, which trades as Commonwealth Brands, from Houchens Industries Inc for a total cash consideration of $1.9 billion (£974 million). After taking into account the net present value of tax benefits arising as a result of the deal, the net cost of the acquisition is $1.5 billion (£769 million). In the year to 30 September 2006, Commonwealth Brands generated earnings before interest, tax, depreciation and amortisation (EBITDA) of $174 million (£89 million).
The Group anticipates that the acquisition will be completed by April 2007 and will be earnings accretive in the current financial year, before taking account of brand amortisation and deferred tax on intangibles. The Group also anticipates that the returns will exceed its weighted average cost of capital in the first full year.
Commonwealth Brands is based in Bowling Green, Kentucky and is the fourth largest cigarette manufacturer in the United States of America, with 3.7 per cent of the 376 billion US cigarette market. Commonwealth Brands employs around 720 people, including a sizeable sales force with excellent trade relationships nationwide, and has a factory which currently manufactures around 14 billion cigarettes a year but has the capacity for 30 billion cigarettes a year.
Gareth Davis, Chief Executive of Imperial Tobacco Group, said:
“This is an excellent deal for Imperial, which will create significant value for our shareholders, and is consistent with our strategy of entering the US tobacco market in a low risk manner. I am delighted that we will finally have the US as a significant part of our international footprint and believe that we will benefit considerably from having the US in our market portfolio.
“Commonwealth Brands is a terrific, young business which gives us immediate and significant access to the world’s most profitable tobacco market.
Jump to full article » |