LOUISVILLE, Ky. — Turning Point Brands Inc., a leading provider of Other Tobacco Products and adult consumer alternatives, announced Thursday the acquisition of certain tobacco assets and distribution rights from Durfort Holdings S.R.L. and Blunt Wrap USA for a total consideration of $46 million.
Durfort is the long-time supplier of TPB’s Make-Your-Own cigar wrap products. The transaction combines Durfort’s and Blunt Wrap USA’s world-class intellectual property and manufacturing know-how with TPB’s market-leading Zig-Zag MYO cigar wraps brand and national distribution.
“We are pleased to enter into this transaction with our business partner,” said Larry Wexler, TPB president, and CEO. “In addition to the immediately accretive financial benefits, the transaction secures long-term control of our Zig-Zag MYO cigar wrap products and provides us access to a deep portfolio of tobacco products with significant immediate and future strategic value. This solidifies our current market position and provides a base for accelerated expansion with novel and leading-edge products.”
Through this transaction, TPB acquires co-ownership in the intellectual property rights of all Durfort’s and Blunt Wrap’s Homogenized Tobacco Leaf cigar wraps and cones. The acquisition eliminates current royalty related expenses on HTL cigar wraps and cones, providing for expanded margins. TPB will also enter into an exclusive Master Distribution Agreement to market and sell the original Blunt Wrap cigar wraps brand in the USA. The Master Distribution Agreement is expected to be effective in the next 120 days, adding complimentary access to difficult to reach alternative channels.
“This partnership between Durfort and Turning Point Brands has been highly successful in introducing innovative products to the Other Tobacco Products space,” said Danny Sinclair, founder of Durfort and Blunt Wrap USA. “Durfort looks forward to continuing to work with TPB in bringing exciting new alternative products to adult consumers and in expanding distribution of the Blunt Wrap brand through TPB’s nationwide distribution network.”
The purchase price of $46 million will be satisfied through $36 million in cash at closing and a $10 million promissory note. The transaction is expected to add approximately $5 million of net sales and $7 million of EBITDA on a pro forma annualized basis, due to consolidating adjustments and reduction of royalty fees in costs of goods sold.
About Turning Point Brands, Inc.
Louisville, Ky.-based Turning Point Brands, Inc. (NYSE: TPB) is a leading U.S. provider of Other Tobacco Products and adult consumer alternatives. TPB, through its focus brands generates solid cash flow which it uses to finance acquisitions, increase brand support, and strengthen its capital structure. TPB does not sell cigarettes. More information about the company is available at its corporate website, www.turningpointbrands.com.
About Durfort Holdings S.R.L.
Durfort is an industry leader in alternative cigar and cigar wrap manufacturing and distribution.
About Blunt Wrap USA
Blunt Wrap USA has been an innovator of new products in the smoking alternatives market since 1997 and has secured patents in the USA and internationally for novel smoking wrappers and cones.