JT Group to Acquire Vector Group Ltd.

TOKYO--(BUSINESS WIRE)--Japan Tobacco Inc. (JT) (the “Company”) (TSE: 2914) announces today that the JT Group has reached an agreement with Vector Group Ltd. (“VGR”), the fourth largest tobacco company in the United States, to acquire VGR.

Based on the agreement, the JT Group will conduct a tender offer for all outstanding shares of VGR, through Vapor Merger Sub Inc., an entity the JT Group established for the purpose of this acquisition. Through the tender offer and a subsequent statutory merger, the JT Group intends to acquire 100% of VGR’s outstanding fully diluted share capital for a per share price of $15.00, representing a total equity value transaction estimated at around USD 2.4 billion (approximately 378 billion yen). The transaction, which is unanimously supported by the board of directors of VGR, is expected to be completed by the end of JT Group’s current fiscal year, ending December 31, 2024, subject to receipt of antitrust approvals and satisfaction of customary closing conditions. Following closing, VGR will be a wholly owned consolidated subsidiary of JT and be delisted from the New York Stock Exchange.

Strategic rationale
In line with the JT Group’s tobacco business strategy, outlined in Business Plan 2024, this acquisition will add a growing and historically profitable business, which is expected to improve the Company’s Return-On-Investment (ROI) in combustibles. The transaction will significantly expand JT Group’s presence in the US, the second largest tobacco market in net sales and one of the most profitable globally. Furthermore, it is expected to strengthen the Group’s financial position through mid to long term hard currency profits and cash flows, which will support the Company’s investment strategy in Reduced-Risk Products, notably in heated tobacco sticks.

Executive comments
“We are excited by this acquisition which, in line with our tobacco business strategy, will contribute to the acceleration of the ROI in our combustible business and expand JT Group’s global footprint. By adding this sizeable and historically profitable business to our Company, we are confident the transaction will contribute to sustainable growth and increase JT Group’s corporate value,” said Masamichi Terabatake, JT Group CEO and President of the Tobacco Business.

“This transaction will significantly increase our US presence, boosting our market share from 2.3% to approximately 8.0% and giving us full ownership of two of the top-10 US cigarette brands. The transaction will enable us to also strengthen our distribution network, and create mid to long term strategic opportunities to boost our competitiveness in this major tobacco market,” said Eddy Pirard, President and CEO of JT International.

1. Overview of newly acquired company