Japan-based tobacco company The JT Group has entered into an agreement with Vector Group Ltd. (VGR), the fourth largest tobacco company in the United States, to acquire VGR for approximately $2.4 billion, Japan Tobacco Inc. (JT) has announced.
Based on the agreement, the JT Group will conduct a tender offer for all outstanding shares of VGR, through Vapor Merger Sub Inc., an entity the JT Group established for the purpose of this acquisition. Through the tender offer and a subsequent statutory merger, the JT Group intends to acquire 100% of VGR’s outstanding fully diluted share capital for a per share price of $15, representing a total equity value transaction estimated at approximately 378 billion yen ($2.4 billion).
The companies expect the transaction, which has been unanimously approved by the boards of both companies, to be completed by the end of JT Group’s current fiscal year, ending Dec. 31, 2024, subject to receipt of antitrust approvals and satisfaction of customary closing conditions. Following closing, VGR will be a wholly owned consolidated subsidiary of JT and be delisted from the New York Stock Exchange (NYSE).
The transaction will significantly expand JT Group’s presence in the United States, the second largest tobacco market in net sales and one of the most profitable globally, the companies said. It is expected to strengthen JT Group’s financial position through mid- to long-term hard currency profits and cash flows, which will support the company’s investment strategy in reduced-risk products, notably in heated tobacco sticks, it said.
“We are excited by this acquisition which, in line with our tobacco business strategy, will contribute to the acceleration of the [return on investment] in our combustible business and expand JT Group’s global footprint. By adding this sizeable and historically profitable business to our company, we are confident the transaction will contribute to sustainable growth and increase JT Group’s corporate value,” said Masamichi Terabatake, JT Group CEO and president of the tobacco business.
“This transaction will significantly increase our U.S. presence, boosting our market share from 2.3% to approximately 8% and giving us full ownership of two of the top-10 U.S. cigarette brands. The transaction will enable us to also strengthen our distribution network and create mid- to long-term strategic opportunities to boost our competitiveness in this major tobacco market,” said Eddy Pirard, president and CEO of JT International.
“Vector Group and JT Group share a commitment to quality and excellence and providing consumers an outstanding value proposition in the U.S. cigarette market,” said Howard Lorber, president and CEO of Vector Group Ltd. “This transaction delivers significant value to Vector Group stockholders and creates opportunities for our employees, who will become part of a leading global organization. Vector Group has an incredibly talented team who have been completely dedicated to building a strong business. JT Group has deep respect for Liggett Vector Brands’ legacy of value-focused, quality products and looks forward to continuing to meet customers’ evolving needs.”
Vector Group, based in Miami, is a holding company for Liggett Group LLC, Vector Tobacco LLC and New Valley LLC. Liggett Group LLC’s cigarette brands include Eagle 20’s, Montego, Pyramid and Grand Prix.
Japan Tobacco is a global company headquartered in Tokyo, Japan. JT Group has approximately 53,000 employees and 62 factories worldwide, operating in three business segments: tobacco, pharmaceutical and processed food. Within the tobacco business, the largest segment, it sells products in more than 130 markets, and its flagship brands include Winston and Camel (outside the United States), as well as Mevius and LD. It is committed to investing in reduced-risk products, it said, and the company markets its heated tobacco products under the Ploom brand.
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