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Inside Cuba

World’s Biggest Cigar Company Changes Owners

A mysterious consortium of investors pays $1.38 billion for Imperial Brands’ premium cigar division.
By Gordon Mott | From The Bond Legacy, July/August 2020
World’s Biggest Cigar Company Changes Owners
Photo/Jacob Kepler
Fernando Domínguez will remain president and CEO of Tabacalera, one of the world’s largest cigarmakers.

The rumors swirled nonstop for over a year, ever since the United Kingdom’s Imperial Brands announced it would divest its premium cigar divisions, including Tabacalera, the partner in Cuba’s Habanos S.A. cigar monopoly, and Tabacalera USA. There was word of bidders from Russia, the Middle East, Mexico, Spain, the United States and China. At one point, the Coronavirus rampage had people speculating that any deal would collapse and the sale would be delayed.

On April 27, 2020, Imperial announced the sale to two corporate entities, Gemstone Investment Holding Ltd., which agreed to acquire the U.S. subsidiary for approximately $208 million, and Allied Cigar Corp., which is buying Imperial’s global assets in the premium cigar business for $1.17 billion. The combined company will remain the largest producer of premium, handrolled cigars in the world. 

While there is no fixed date for the deal’s closing, sources say they expect the handover to take place in July. Both companies involved in the purchase were incorporated for the first time in early March in Hong Kong.

“We are complying with the wishes of the consortium and the investors to remain anonymous for now,” says Fernando Domínguez, who will remain as CEO of the company. “The organization is going to stay the same, both with me in charge worldwide, and our same teams in the United States, Cuba and around the world.”

The two corporations consist of the same consortium of investors. Little is known about them other than their history in finance and some other businesses (but not tobacco). “They have a long-term vision,” says Domínguez, which he implied was one of the key factors in choosing a buyer, both by Imperial and their partners at Habanos S.A. “They have a passion for our product.”

“What no one wanted was a group of speculators that would come in, use the company to maximize its value and sell it to someone else quickly,” says Luis Sánchez-Harguindey Pardo de Vera, the co-president of Habanos S.A. with Inocente Núñez Blanco, from the Cuban side. “Imperial and their Cuban partner did a very thorough analysis of who the buyers were and what their intentions were too.” He reiterated that it was vital for everyone, but especially those who are part of the Cuban side of the company, to trust and have confidence that the buyers were going to respect the traditions of one of the country’s most iconic products and build it for the long term.

In the United States, Javier Estades, the president and CEO of Tabacalera USA, says his team is thrilled with the outcome of the sale. “We don’t have to worry about being part of a big corporation that wasn’t focused on premium cigars. We will be more dynamic, more flexible and more able to influence the critical processes needed to manufacture great cigars.”

The global company will retain the name Tabacalera. “It is the oldest company in the world in the tobacco business,” says Domínguez. “We’re not going to lose that.” But the corporate structure remains somewhat complicated, in part due to U.S. regulations relating to doing business with Cuba. Gemstone’s control over Tabacalera USA will include all the brands it produces and sells in the United States, including the non-Cuban versions of Montecristo, Romeo y Julieta and H. Upmann; the retailers J.R. Cigars, Cigars.com and Serious Cigars and the Casa de Montecristo stores. 

Allied Cigar will control 50 percent of Habanos S.A., which oversees the sales and marketing of Cuban cigars worldwide; a 50 percent stake in Altabana, which holds stakes in Habanos distributors around the world; a 50 percent share of Internacional Cubana de Tabacos S.A., which produces machine-made cigars and cigarillos, and its sister company that distributes those products, Promotora de Cigarros SL; Tabacalera de Garcia in the Dominican Republic, one of the world’s biggest cigar factories; and the Flor de Copan cigar factory in Honduras plus two premium cigar brands, VegaFina and Flor de Copan.

“We believe this is good for cigar consumers around the world,” says Domínguez. “We are very optimistic. It’s a new adventure. And we now can focus all of our energy on the premium, luxury cigar market.”

Cuba Report Habanos S.A.

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