A lot has been written about General Cigar Co.’s acquisition of the Toraño brands last week. While few could have seen it coming, it was not entirely surprising. As for why it happened and what it means, it’s not that simple. It’s actually hardly simple and a lot will not be known until next year’s trade show and whenever the U.S. Food & Drug Administration (FDA) announces its plans regarding the possible regulation of the premium cigar business. 1. THIS HAD MORE TO DO WITH STG’S IPO THAN THE FDA While most have tried to portray this around the angle of a company selling itself in fear of regulation by the FDA, this deal almost certainly had more to do with the upcoming public offering by Scandinavian Tobacco Group (STG), General Cigar Co.’s parent company, next year. Repeatedly, we have been told that the IPO will give STG (General) more flexibility in regards to the next five years, specifically, the capital required to complete acquisitions like this. General has an optimistic outlook on the FDA, and why not? Even under the worst of scenarios, its most valuable assets (Macanudo Café, Cohiba, etc.) would be grandfathered in as they were marketed ...
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