Swedish Match Acquires Snuff and Pipe Tobacco Company in South Africa
Swedish Match has signed an agreement to acquire 80 percent of Leonard Dingler (Proprietary) Limited (Dingler) in South Africa.
Dingler was established in the early 1900`s and has remained a family owned business to this date. The company manufactures, sells and distributes tobacco products in South Africa and neighboring countries. Annual sales amount to 360 MSEK. Approximately 25% of the volume is in snuff and the remainder is in pipe tobacco.
The transaction is structured as an asset deal. The acquisition is expected to be immediately enhancing to earnings per share and cash flow, and the operating margin after acquisition related depreciation and amortization is estimated to be 30%. The company will be included in Swedish Match Group financials as from the fourth quarter 1999.
Dingler's principal brand, ``Boxer,'' is the market leader in South Africa's pipe tobacco market, as is its ``Taxi'' brand in the snuff market. Both markets have a stable growth pattern. The acquisition includes a production plant in Boksburg, on the outskirts of Johannesburg, and sales offices in Cape Town and Bloemfontein. Dingler has slightly more than 300 employees.
``The acquisition of Dingler reinforces our strategy to grow within our core focus areas: snuff, cigars and pipe tobacco, while providing a high-profitability opportunity in an area of the world which has good growth potential,'' said Lennart Sunden, CEO. ``With this acquisition we now have established a platform in southern Africa, one of the most important markets for smokeless tobacco outside the Nordic countries and North America.''