February 01, 2018

Scandinavian Tobacco Group acquires a leading US online cigar retailer

Scandinavian Tobacco Group today signed an agreement to acquire the business of
Thompson and Co. of Tampa, Inc. (“Thompson”). The purchase price amounts to USD
62 million and the acquisition will be financed by existing cash at hand. The closing of
the deal is expected to take place by the end of March 2018.

Thompson is a leading online retail cigar business in the US, a market where approximately
two thirds of all handmade cigars are sold online. A family-owned business,
Thompson was founded in 1915 and is based in Tampa, Florida. It has annual net
sales of c. USD 100 million and 185 employees. Thompson provides Scandinavian Tobacco
Group access to a substantial and attractive customer base, auction and retail
websites as well as a retail store and a call centre facility in Tampa.

CEO of Scandinavian Tobacco Group, Niels Frederiksen says: “I am pleased to announce
this acquisition which strengthens our position in the online retail channel in
the US. 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.”

Bob Franzblau, CEO of Thompson, said: “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. Becoming part of Scandinavian Tobacco Group will ensure an
exciting future of opportunity for our employees, our customers and our suppliers.”
The acquisition of Thompson is expected to deliver material synergies and scale benefits
with the margins of the combined businesses over time being lifted towards Cigars
International’s existing level. Thompson is currently operating with low single
digit EBITDA margins.

The acquisition is expected to have a positive impact on the Group’s adjusted EBITDA
during 2019.

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