Scandinavian Tobacco Group has announced its intent to acquire all of the shares of Agio Beheer B.V. from Highlands Beheer B.V. Agio Beheer B.V. is the holding company of the Royal Agio Cigars. The deal is expected to complete in the first half of 2020 and is subject to regulatory approval. On a debt and cash free basis (the enterprise value), the transaction is valued at 210 million euros or 231.63 million dollars with the acquisition financed by cash at hand and debt.

Royal Agio Cigars is based in the Netherlands and is known for its Mehari’s and Panter machine-made brands as well as the Balmoral premium cigar brand. Royal Agio employs 3,200 full-time employees. In 2018, the company reported annual net sales of 133 million euros (146.70 million dollars) with an EBITDA of EUR 18 million (19.85 million dollars). If the transaction is completed, the combined group would form a company of 10,000 employees and the combined group’s net sales for 2018 would be 7.7 billion DKK (Danish krone) or 1.14 billion U.S. dollars

While many in the U.S. market have gotten to known Royal Agio Cigars for its recent growth in the U.S. market, the company is a monster in Europe when it comes to its machine-made portfolio – particularly with its Mehari’s and Panter brands.

In a press release announcing the acquisition, Scandinavian Tobacco Group said, “Royal Agio can provide Scandinavian Tobacco Group access to a strong product portfolio and important market positions in key European machine-made cigar markets. The acquisition can secure leading positions in France, Belgium and The Netherlands and significantly improve the position in key cigar markets such as Spain and Italy.”

Scandinavian Tobacco Group CEO Niels Frederiksen commented: “I am very pleased and proud that we have taken this important step towards an acquisition of Royal Agio. If completed, the acquisition will be an important step in our ambition of becoming the global leader in cigars, as it significantly strengthens our position in several key machine-made cigar markets in Europe and enables us to deliver an attractive range of cigars of the highest standards to our consumers.”

The company was founded by Jacques Wintermans and now is run by fourth-generation family member Boris Wintermans.  The company has built a reputation as an independent family company.  In 2004, for the company’s centennial, her Majesty Queen of the Netherlands awarded Agio Cigars with the Royal Warrant of Appointment.  The company has production facilities in the Netherlands, Belgium, Sri Lanka, and the Dominican Republic – and sells to over 100 countries.

“This decision has not been easy. We have a wonderful company with highly committed employees and loyal business partners, some of whom have been working with us for over 50 years. But the combination of the two companies will be in a better position to deal with the financial consequences of ever-increasing legislation and regulations. We carry responsibility for the continuity of Agio and consider our decision to be inevitable in the long term. When the buyer came forward, we began constructive discussions regarding the benefits and resilience the combination of our companies could achieve,” commented Boris Wintermans.

Royal Agio Cigars says for now its business-as-usual, “We are now focussing on a proper dialogue with the works councils and staff representatives within our company, and of course we are committed to communicating responsibly with our employees,” added Wintermans.

Scandinavian Tobacco Group is best known in the U.S. as the parent company of General Cigar Company and Cigars International.

The move also comes as surprise to some as Scandinavian Tobacco Group has been rumored to be one of the players in contention to acquire the premium cigar brands of Imperial Tobacco Group. Earlier this year, Imperial announced it was divesting its premium cigar portfolio.

The news comes less than four days before the opening of Inter-Tabac 2019, Europe’s largest tobacco trade show.

Updated 9/17/19: Added statement from Boris Wintermans.