LOUISVILLE, Ky. -- Tobbaco-product maker Turning Point Brands has signed a definitive agreement to acquire four chewing-tobacco brands and a twist-tobacco brand from Wind River Tobacco Co. (WRTC) for approximately $2.5 million.
Turning Point, a Louisville, Ky.-based provider of other tobacco products (OTP) through brands such as Stoker’s, Zig-Zag and Primal, said the addition of the WRTC chewing-tobacco brands—with a collective market share of more than 2%—will boost its chewing-tobacco market share from 25.7% in the second quarter to an estimated 27.7%. The company said that it is currently the No. 2 marketer of chewing tobacco.
Subject to customary closing conditions and approvals, the purchase of the Springfield, Tenn.-based WRTC is expected to close before year-end. Terms were not disclosed.
The purchase adds WRTC’s discount chewing-tobacco brands (Big Mountain, Appalachia, Black Mountain and Springfield Standard) to Turning Point Brands’ chewing-tobacco portfolio, which includes Stoker’s, Beech-Nut and Trophy. WRTC’s chewing-tobacco brands have been available primarily in the Central and South Atlantic regions of the United States. Turning Point also acquired WRTC’s twist-tobacco brand, Snake River. Concentrated in the Pacific Northwest, the brand expands Turning Point’s OTP footprint into the twist-tobacco market.
“We have articulated our strategy to acquire attractive brands and assets in the fragmented OTP market. With the acquisition of these strong regional brands, this is a great example of the robust opportunity for consolidation,” said Larry Wexler, president and CEO of Turning Point. “We see this as a ‘plug-and-play’ acquisition. These brands will allow us to leverage our company’s core competencies in national distribution and sales-force infrastructure, and we expect that future operating margins will reflect these strengths. With these brands currently available in only 25% of the market, we see a clear potential to make these products available to a much larger universe of chewing-tobacco outlets.”
Wexler continued, “We are delighted to acquire these quality WRTC brands that have demonstrated their appeal by attracting a loyal and growing base of consumers.”
Following the transaction, WRTC will continue to focus on its smoking products business, said George Marks, president of WRTC. “We’re very pleased with the outcome of the transaction and believe Turning Point Brands is exceptionally well-positioned to further accelerate the success we’ve achieved with these brands," he said.
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