Mid Market Advisors

In the News

April 2, 2018

STG Completes Thompson Purchase

Scandinavian Tobacco Group (STG) has announced that it has finalized its $62 million purchase of Thompson and Co., a Tampa-based cigar retailer.

While the deal was announced in January, STG is a public company and as such is required to announce the formal closing.

Thompson is one of the industry’s oldest and largest retailers. Founded in 1915, Thompson was a pioneer in the cigar industry, becoming the first postal permit holder in the city of Tampa. Today, the business includes a mail-order catalog, an online website and a retail storefront.

Its annual revenue is $100 million, making it one of the five largest cigar retailers. Thompson was also one of the last major retailers not owned by a cigar company. The Franzblau family purchased Thompson in 1960.

Under STG ownership, it will join a company that already owns the largest cigar retailer: Cigars International.

Executives from STG told halfwheel that Thompson will continue to operate out of Tampa for one year before the company makes any changes. It is widely expected that STG will consolidate the operations, likely to Pennsylvania, where Cigars International is headquartered.

Last year, Cigars International underwent a massive overhaul of its enterprise resource planning (ERP) and warehouse management system. Unfortunately, the implementation did not go smoothly and the retailer was unable to process thousands of orders, leading to STG to miss its performance outlook for 2017.

However, that same overhaul will pay dividends in the Thompson acquisition.

In addition, to Thompson, Cigars International also will open up its first brick-and-mortar stores outside of Pennsylvania. The company is building two stores in the Dallas-Fort Worth area, with the first opening in summer of this year.

STG also owns General Cigar Co., which sells Cohiba, Macanudo, CAO, Partagas, Hoyo de Monterrey, Punch and other brands in the U.S.

The move means STG will generate an estimated $350 million in retail sales, over 20 percent of the total U.S. cigar industry.

Read the article on Halfwheel.com here.

January 2018

Scandinavian Tobacco Group—the publicly-traded company that owns General Cigar Co. and Cigars International—has acquired Thompson and Co. of Tampa, Inc., a mail order cigar business with $100 million in annual revenue.


The purchase price is for $62 million and the deal is expected to close by the end of March.


“I am pleased to announce this acquisition which strengthens our position in the online retail channel in the US,” said Niels Frederiksen, ceo of STG, in a press release. “Our existing US online retailer Cigars International will in combination with Thompson be able to deliver an unmatched range of premium cigars at the highest level of service to the US consumers. At the same time we foresee significant cost synergies to the benefit of our customers and shareholders.”


Thompson was founded in 1915 and has remained a family-owned business ever since. The company is best known for its catalog, but it also operates an online website and retail store within its Tampa headquarters.


“Having spent 58 years making Thompson Cigar one of the most respected mail order cigar businesses in the country, it is now time to hand over the reins to a new owner that can continue to serve the long-term interest of the company,” said Bob Franzblau, ceo of Thompson. “Becoming part of Scandinavian Tobacco Group will ensure an exciting future of opportunity for our employees, our customers and our suppliers.”


STG says it will use existing cash on hand to finance the deal.


The deal gives STG at least $350 million in annual revenue from its retail operations. Cigars International is the largest retailer in the U.S., while Thompson is one of the four largest alongside Famous Smoke Shop and JR Cigar.


It puts Thompson and the company’s slew of private label brands alongside some of the largest names in the cigar industry. General Cigar Co. sells Macanudo and CAO internationally, as well as Cohiba, Partagas and Hoyo de Monterrey in the U.S.


When asked about the future of Thompson Cigar, both as it stands now and with the possibility of using the Thompson Cigar name elsewhere, Régis Broersma, president of General Cigar Co., said that “the Thompson brand has equity and will continue to operate as usual, including the website.” He added that they will explore synergies at the appropriate time.


The company declined to specify whether it has plans to use the Thompson Cigar name in other brick-and-mortar locations.


STG closed at DKK 121.40 ($20.24)


Patrick Lagreid contributed to this story.

Read the article on Halfwheel.com here.

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Company: MidMarket Capital Advisors, LLC Name: Patrick Hurley Email: phurley@mmadvisors.com Web: www.mmadvisors.com Address: 1629 Locust Street, Philadelphia, PA 19103 USA Tel: +1 215 875 8201
MidMarket Capital Advisors, LLC serves owners of privately-held businesses on corporate finance, M&A and other financing and ownership-related matters. Patrick Hurley, Managing Director at MidMarket Capital Advisors, tells us how the firm helps its clients achieve their goals and add value to their businesses. MidMarket Capital Advisors is based in the Northeast US, and the business environment there, says Patrick Hurley, MidMarket’s Managing Director, varies by industry and the specific goals of the firm’s clients. “Conditions are generally good and continuing to improve. There remains a relative scarcity of high quality businesses and an abundance of earmarked capital seeking that type of business for investment or acquisition. There is a marked difference between the professional ownership sector and the entrepreneurial owner sector.” The clients the firm serves, Hurley says, are experienced players in the business world. “The clients we serve are sophisticated and have valuable businesses with a wide range of options and alternatives for raising capital as well as planning and implementing ownership transitions or acquiring other companies. We clarify how the markets match with our clients, who are then best prepared to select the course to achieve their goals. “The clients we serve own middle market companies based in North America, Europe, Asia and Latin America. Those businesses range in value from US$25-200m in the following industries: industrial and consumer product manufacturing and distribution; business services; natural resources; and financial services.”
MidMarket adds value to its clients’ businesses by providing information and advice accompanied by an appropriate role in negotiations and management of programs and transactions, Hurley says. “Two currently active US$100m-plus projects both involve US-based businesses with significant European and Latin American manufacturing operations. In one case we are serving as lead financial advisor in the sale of the business which features a complex earn-out structure. The other involves serving a management team of a private equity controlled business. In each case we are helping our clients to exercise care and good judgement through our experience and expertise.” But why would a company seeking financial advice use an external service provider, rather than in-housing the service? “The senior executives of the businesses we serve are highly capable and insightful,” says Hurley. “They know what they want and whether they have adequate internal resources. The services we offer are outside of the normal experience of in-house professionals, and there are many occasions where an independent advisor brings a fresh perspective and current market awareness that is not otherwise available.” Nearly all MidMarket’s opportunities come via referrals from companies who have been happy with its approach, and have found it an easy firm with which to do business, says Hurley. “We have flexible compensation arrangements and the highest accountability for personalised service, delivered by partners who own the firm and we dedicate ourselves to achieving the goals of our clients.” Click here to see full publication: http://www.acquisition-intl.com/index.php/latest-issue-2/2014-back-issues?id=1956#66 Copyright © Acquisition Int. 2014. Registered in England and Wales. No. 07400916. Unit 10 Barton Marina, Barton Turn, Barton Under Needwood, Burton on Trent, Staffordshire, DE13 8AS.
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