|Steve Saka (Cigar Coop Photo)|
Former Drew Estate CEO and President Steve Saka took to his Facebook page this evening to address his thoughts on Swisher’s acquisition of Drew Estate Tobacco company.
Saka, who retired from Drew Estate 15 months ago did say his departure did not have anything to do with a pending deal and there were no such discussions taking place with Swisher during his tenure. Saka addressed some of the business reasons the timing was right for a sale, why Swisher International can be an ideal partner for Drew Estate, whether the products and the company will change, and finally he commented on the initial denial of the sale by Chairman Jonathan Drew.
The text of the Facebook post as it appeared on Saka’s Facebook page appears below:
I have been getting slammed today with phone calls, texts, emails regarding Swisher’s acquisition of DE. I have decided for good or bad I am going to share my thoughts.
Like every other jag off with a keyboard I have a myriad of opinions regarding the news, unlike most I probably have greater insight given my experience in our industry and that I served with DE as their President and the CEO for eight years. That being said. I will willfully admit I do not know all the facts so what you are about to read is just my opinion.
– Congrats to my good friends at DE. They have struggled and worked their collective asses off for nearly two decades. It truly is amazing what they have accomplished, a true American success story.
– DE always has suffered under the burden of their rapid growth and expansion. It takes a tremendous amount of cash to operate a handmade cigar factory given that you are forced to buy materials three to five years before you even have the opportunity to try to create a sellable product. So even when you are doing fantastic posting those increases in sales, you are faced with a tremendous cash crunch given the investment needed to maintain the growth curve. IMO it was only a matter of time where either they would had to slow way down or take on an equity partner. Knowing them, “slow” is not in their vocabulary, so some sort of deal with someone was inevitable.
– Adding to the mix the uncertainty of FDA it makes doing a deal with someone with more experience and capacity to deal with this uncertain future wise.
– Given the size of DE, there are very few companies in our industry with the financial wherewithal to be such a partner.
– Swisher is a very well run, privately held company full of good people. Not your typical corporate wonks, so knowing the landscape I think they are the ideal partner given the field of possible suitors.
– I do believe that JD, Marv, Mike and the whole crew love DE. And I think they did a deal that gives them the ability to operate as a stand alone division and intact for the foreseeable future. What more could you ask for? No one is getting laid off, no consolidation of the factory or the US team as part of the deal. My understanding is that -all- of the existing management and key positions are under an agreement to stay. Seldom is a deal made where your people are given a fair opportunity to continue performing and for this the partners in DE deserve praise.
– In any deal like this, all the parties involved are required by non-dislosure agreements to remain silent. Do I think JD could have handled his denial comments better? Yes, but that is in hindsight, plus part of what makes him JD is the fact that he is knock-around, regular guy, not some sophisticated business MBA type. And to be honest, much of the fallout I have been reading today is resulting from what other’s said about the situation more so than what he actually said himself. I know this can be argued endlessly and probably will be for a few more days.
– So what happens to the products? I honestly don’t know, I do know however that the purchase does not automatically mean a change in brands or decrease in the quality. It could mean just the opposite. I do believe that DE will do their best to maintain and improve the products.
– Look do I believe “nothing” will change? No… things always change. They would have changed regardless of who they did a deal with and even if they hadn’t done a deal. Change would have been inevitable regardless, what I don’t know is whether this change will be for the better or the worse, time will only tell.
– And finally, I have read in a few places online speculation that my departing may have had something to do with this “pending” deal. This is untrue as we were not engaged in any such discussions with Swisher during my tenure.
There I have said my two cents… this has to be the world’s longest FB status update… And I did the whole thing in my Scooby Doo underwear!