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LOUISVILLE, Ky. — Turning Point Brands Inc. reached a definitive agreement to acquire four chewing tobacco brands and a twist tobacco brand from Wind River Tobacco Co. for approximately $2.5 million. The deal gives Turning Point Brands four chewing tobacco brands and a twist tobacco brand.
The addition of the WRTC chewing tobacco brands — with a collective market share of more than 2 percent — will boost Turning Point Brands' chewing tobacco market share from 25.7 percent in the second quarter to an estimated 27.7 percent.
Turning Point Brands current portfolio includes Stoker's, Beech-Nut, Trophy, Zig-Zag and Primal. The company is the No. 2 marketer of chewing tobacco.
Subject to customary closing conditions and approvals, the transaction is expected to close before year end. Terms were not disclosed.
Included in the agreement are discount chewing tobacco brands Big Mountain, Appalachia, Black Mountain and Springfield Standard. The brands have been available primarily in the central and south Atlantic regions of the United States.
The Louisville-based tobacco company also acquired WRTC's twist tobacco brand, Snake River. Concentrated in the Pacific Northwest, the brand expands TPB'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 Brands. "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 percent of the market, we see a clear potential to make these products available to a much larger universe of chewing tobacco outlets," he added.
With the transaction, WRTC will continue to focus on its smoking products business.
"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," said WRTC President George Marks.
Turning Point Brands also signed a definitive agreement to acquire Smoke Free Technologies Inc. dba VaporBeast for total consideration of approximately $27 million.
VaporBeast is an e-commerce platform and sales organization serving the new evolving non-traditional channels of retail distribution. The company markets a wide range of products, including e-liquids, vaporizers and accessories, with a number of products under their own proprietary brands, directly to consumers and to more than 4,700 non-traditional retailers.
"We have been investing in our sales distribution into the fast-growing non-traditional retail channels and VaporBeast clearly allows us to dramatically accelerate that effort with significantly less resources," Wexler said.
According to Wexler, Turning Point Brands sees opportunities for growth by leveraging VaporBeast's e-commerce platform with its experienced sales organization by:
- Introducing certain TPB products into VaporBeast's customer base;
- Utilizing the e-commerce platform to distribute products not offered in traditional retail to a portion of the Turning Point Brands' customer base;
- Accelerating the penetration of additional non-traditional retail stores; and
- Strengthening the organization through the application of proven best practices to expand breadth of products sold to customers.