Vector Group to Sell Itself to JT Group in $2.4 Billion Deal — Update

By Adriano Marchese

Tobacco company Vector Group has agreed to be acquired by Japan-based tobacco giant JT Group in a deal worth $2.4 billion.

The move represents a significant expansion for JT Group in the U.S. As part of its 2024 business plan, JT Group has been weighing the idea of expanding its combustibles business, where the U.S. ranks second as the largest tobacco market in net sales and one of the most profitable globally, JT Group said.

Vector Group said Wednesday that JT Group, which also has pharmaceuticals and processed food businesses, plans to acquire all its outstanding shares for $15 a share in cash.

The price represents a 29.9% premium over the 60-day volume-weighted average share price, Vector Group said. The company has seen its stock rise 24% in the year, closing on Tuesday at $13.99 a share, just below its 52-week high of $14.08.

Under the proposed merger, Vector Group's popular brands Liggett and New Valley would join JT Group as wholly owned subsidiaries. JT Group also owns certain business rights outside the U.S. of recognizable brands including Winston, Camel and American Spirit.

Vector Group reported holding a 5.8% share of the tobacco retail market as of June 30, and posted tobacco revenue of $371.9 million in the second quarter.

"This transaction will significantly increase our U.S. presence, boosting our market share from 2.3% to approximately 8.0% and giving us full ownership of two of the top-10 U.S. cigarette brands," President and CEO of JT International Eddy Pirard said.

The U.S. tobacco market in 2021 was valued at about $75 billion, according to data from market research firm Grand View Research.

The boards of both companies have unanimously agreed to the merger, and Vector Group said it will submit more details of the transaction to the Securities and Exchange Commission.

The acquisition is expected to complete before the end of the calendar year.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

August 21, 2024 09:57 ET (13:57 GMT)

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