Gurkha Cigars will not be acquiring the American Caribbean Cigars factory in Nicaragua. Last May, the company announced its intention to purchase the small factory, stating that a deal was close to completion. Eight months later, the deal has been called off, according to both companies. Gurkha says the decision was a financial one, based on analysis by brand owner Kaizad Hansotia. The company now says it will build its own cigar factory instead.
“After reviewing all the plans and upgrades we wanted to do to get [the factory] to where Kaizad wanted—he decided it was just easier to build our own to spec,” Gurkha marketing director Eddy Guerra said.
American Caribbean Cigars is owned by Alex Menendez and Damian Tapanes. Last year, Menendez told Cigar Aficionado that Hansotia was positioned to enter into a partnership with the two owners. As part of the deal, Gurkha would acquire a stake in the Nicaraguan cigar rolling factory, and would be allowed to display its branding on the building, but all American Caribbean contract brands and house brands would remain in production at the facility.
In a follow-up conversation with American Caribbean, Menendez confirmed the deal was now off, and says the decision to not move forward was mutual.
“We couldn’t come to terms—It was a joint agreement not to move forward,” Menendez says. “Ultimately they want their own factory.”
Gurkha and American Caribbean have worked together for six years, with the Nicaraguan facility producing several of Gurkha's premium cigar brands. Menendez says American Caribbean will continue to roll cigars for Gurkha.
“We still have a very close relationship with Gurkha,” Menendez says. “Kaizad is a very good friend.”Gurkha is a cigar brand that doesn’t own a cigar factory, and at this time it has all of its cigars made under contract. In addition to cigars rolled at American Caribbean, Gurkha has cigars made at Las Lavas S.A. and PDR Cigars, both located in the Dominican Republic.