Scandinavian Tobacco Group has been given the green light by the Commerce Commission to merge its New Zealand businesses with importer Swedish Match.The clearance is subject to the merged entity divesting the Willem cigar brand.The new company will be con
Scandinavian Tobacco Group has been given the green light by the Commerce Commission to merge its New Zealand businesses with importer Swedish Match.
The clearance is subject to the merged entity divesting the Willem cigar brand.
The new company will be controlled by Scandinavian Tobacco Group (STG), which will hold 51% of the shares. The remaining 49% of the shares will be held by Swedish Match (SM).
STG and SM manufacture and supply a range of tobacco products, including cigarettes, cigars, pipe tobacco, roll-your-own fine cut tobacco and accessories in the USA, Europe and the Asia Pacific region.
In New Zealand, the only areas of overlap between STG and SM are in the importation and wholesale supply of cigars and pipe tobacco.
Commerce Commission chair Dr Mark Berry said the acquisition would not lessen competition in the national markets for the import and supply of cigars and pipe tobacco.
While the merger would give rise to a significant aggregation of market share in respect of cigars, the divestment of the Willem brand to an independent party will be sufficient to remedy the loss of competition the cigar market, according to the Commission.
SM already distributes STG pipe tobacco brand in New Zealand, so the merger will not materially alter the level of competition in the pipe tobacco market.
Up until now, STG cigars were exported to Stuart Alexander in Australia, which then re-exported them into New Zealand.
In 2009, a total of 3216kg of STG pipe tobacco and 1086ks of SM pipe tobacco was sold in New Zealand.
Based on the SM and STG 2009 full year results, the new company would have had an annual turnover of approximately 690 million euros and a volume of more than 2.5 billion cigars.
But New Zealand cigar and pipe tobacco volumes account for a very small proportion of SM and STG’s global sales.
Although approximately 15 billion cigars are sold each year around the world, in New Zealand in 2009 a total of 9.49 million cigars, valued at approximately $6.99 million, were supplied. This accounts for only 0.063% of global cigar sales.
STG is a privately owned Danish company involved in the manufacture and supply of tobacco and associated products. It has 19 companies operating in over 100 countries worldwide.
SM is a publicly listed company involved in the manufacture and supply of cigars, pipe tobacco, smokeless tobacco products and lights. The company is headquartered in Stockholm, Sweden. It employs more than 11,000 people in more than 22 countries worldwide.
