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Swedish Match and Gum Tech Form Joint Venture for Non-Tobacco Nicotine Products

12/21/99

PHOENIX--(BUSINESS WIRE)--Dec. 21, 1999--Swedish Match AB and Gum Tech International have reached an agreement in principle to form a joint venture to explore new business opportunities in the field of non-tobacco nicotine products. The joint venture will

Under the terms of the agreement, Swedish Match will own 51% and Gum Tech will own 49% of the joint venture. Gum Tech will contribute intellectual property related to chewing gum products containing nicotine, and Swedish Match will contribute $10 million in start-up capital. Swedish Match, based in Stockholm, Sweden, is an international group which develops, manufactures, markets and distributes, through its own subsidiaries worldwide, a broad range of tobacco products within the OTP (Other Tobacco Products) category, with smokeless tobacco as its core business along with cigars and pipe tobacco, as well as matches and lighters. The company's extensive range of products is sold in 140 countries, with sales for the 12 month period ended September 30, 1999 totaling approximately MSEK 900 (approximately $1 Billion US). Gum Tech, based in Phoenix, Arizona, is a leader in the development and manufacture of functional chewing gum products. Specialty chewing gums include active over-the-counter drug ingredients formulated to provide specific health-related benefits to the user. The company partners with major food, pharmaceutical, and other companies to develop, market and distribute its chewing gums, and supports its own line of branded gums. Gum Tech also owns 60% of Gel Tech LLC, which markets Zicam(TM), a new homeopathic cold remedy. ``So far we have operated in the tobacco sector with emphasis on smokeless tobacco. By this move we are looking into the possibilities of broadening the scope of our core business,'' said Lennart Sunden, President and CEO of Swedish Match. ``This joint venture provides a possibility to explore further business opportunities by providing alternative products for the smoker, who cannot or does not want to smoke.'' ``Swedish Match has impressive know-how and expertise in the field of marketing and distributing fast moving consumer products worldwide, especially to the tobacco consumer,'' said Gary Kehoe, President of Gum Tech. ``We believe consumers should have more options in the non-tobacco nicotine market. It is our goal to develop non-tobacco nicotine products that are viewed by independent, public health authorities, as well as the consuming public, as acceptable alternatives to cigarette smoking from a health perspective.'' The joint venture is subject to the execution of definitive agreements. Gum Tech is located at 246 East Watkins Street, Phoenix, Arizona 85004. E-mail: brown@gum-tech.com Gum Tech Forward-Looking Statement: This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the execution of definitive agreements related to the proposed joint venture, the definitive terms of the joint venture, and the potential for business contemplated by the joint venture. These forward-looking statements are based on the company's expectations and are subject to a number of risks and uncertainties, many of which cannot be predicted or quantified and are beyond the company's control. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause actual results to differ materially from the company's expectations include the possibility that Gum Tech and Swedish Match may be unable to consummate the proposed transaction as contemplated, that the terms of the joint venture ultimately may not be as favorable to Gum Tech as contemplated by the agreement in principle, that the joint venture may not be successful in launching any product for a variety of reasons, and that the joint venture may ultimately be unsuccessful. Other factors are described in the company's reports filed pursuant to the Securities Exchange Act of 1934.

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