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Home > What's New > Altadis Buys Control of JR Cigars
Altadis Buys Control of JR Cigars
Posted: Friday, October 10, 2003
By David Savona
The world's largest cigar company just got bigger. Spanish-based Altadis S.A. has acquired a controlling interest in 800 JR Cigar Inc., America's largest cigar retailer. The move will give the Spanish/French cigarmaker unprecedented access to American cigar smokers.
JR, the juggernaut of cigar retailers, sells all types of cigars via its web site, catalog and retail stores. JR owns three outlet centers in North Carolina and eight other retail stores, including one in midtown Manhattan. The Whippany, New Jersey company was owned by Lew Rothman and his family. Rothman will continue to serve as president and chief executive officer of JR.
Rothman could not be reached for comment.
Altadis did not disclose the terms of the acquisition, or the current sales of JR. In the release, it said JR had "total economic sales" of $62 million, a figure that is smaller than total revenues. Industry estimates for JR's annual revenues run in excess of $250 million.
JR enjoyed tremendous success in the late 1990s, and enjoyed sales growth despite the end of the cigar boom: revenues increased from $240 million in 1997 to $287 million in 1998 and to $317 million in 1999. The company had gross profits of $50 million, $53 million and $55 million, respectively, in those three years, while the company was publicly held.
JR went public in 1997, joining several other companies in feeding Wall Street's short love affair with cigar stocks. Shares flirted with $40 in late 1997, but had fallen below $10 by 1998. In September 2000, the Rothman family took the company private in a $13 per share cash tender offer, a $23.4 million deal.
Altadis, which has headquarters in Madrid and Paris, made the acquisition through subsidiary Tabacalera Cigars International S. A. The company expects the acquisition to help earnings in the first year.
Altadis U.S.A. Inc., formerly known as Consolidated Cigar Corp., is the American subsidiary of Altadis. Based in Fort Lauderdale, it owns the American rights to a host of Cuban cigar brands. The company's Tabacalera de Garcia Ltd. makes a host of leading handmade cigar brands for the American market, including the venerable Dominican Montecristo, H. Upmann and Romeo y Julieta cigars. Altadis U.S.A. also makes some of the largest machine-made brands in America, including Dutch Masters, El Producto, Backwoods and Phillies.
In 2002, Altadis S.A. claimed nearly 25 percent of the world market for cigars, and sold about 3.2 billion units. It has 20,000 employees and activities in nearly 35 countries. The company makes cigars by hand and machine, makes blonde and dark cigarettes, and owns half of Habanos S.A., the Havana company that exports all of Cuba's cigars.
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