Philip Morris International Gains Its First E-Cigarette

Acquisition of Nicocigs complements distribution deal with Altria

Philip Morris International PMI Nicocig (CSP Daily News / Convenience Stores / Tobacco)

LONDON -- Philip Morris International Inc. (PMI) has announced its acquisition, for an undisclosed price, of Nicocigs Ltd., a leading U.K.-based e-vapor company, the principal brand of which is Nicolites electronic cigarettes.

For PMI, which already has a licensing and distribution agreement for Richmond, Va.-based Altria Group Inc.'s e-cigarette products, the deal provides the London-based company with its first e-cigarette product.

"This acquisition is complementary to our previously announced agreement for the license and distribution of Altria Group Inc.'s e-vapor products. In addition, it provides PMI with immediate access to and a significant presence in the growing e-vapor category in the U.K. market, as well as a strong retail presence, which further complements the current restructuring of our distribution arrangements in the U.K.," said Drago Azinovic, PMI's president, European Union Region.

Nicocigs was founded in 2008 and is based in Birmingham, England. The company employs a field force of approximately 40 sales representatives and distributes to more than 20,000 points of sale within the U.K.

In Dec. 2013, Altria entered into a series of agreements with PMI addressing the intellectual property licensing, regulatory engagement and contract manufacturing of e-cigarettes, as well as other products. Altria is providing PMI with an exclusive license to commercialize Altria's e-vapor products internationally.

These agreements are "consistent with Altria's ongoing efforts to develop a robust portfolio of innovative products that meet adult tobacco consumers' preferences, including those that have the potential to be authorized by the Food & Drug Administration (FDA) as modified risk tobacco products," Marty Barrington, Altria's chairman and CEO, said at the time.

"This acquisition provides PM with a well-known brand in the more developed U.K. market … and a strong retail presence," said Bonnie Herzog, managing director of beverage, tobacco and convenience store research for Wells Fargo Securities LLC, New York, in a research note. "We believe this acquisition complements PM's strategic agreement with [Altria] and sets the stage for PM to be an e-vapor market leader."

PMI is a leading international tobacco company, with seven of the world's top 15 international brands, including Marlboro. PMI's products are sold in more than 180 markets.