Tobacco company seeks buyer for cigar business

Tobacco company Imperial Brands has revealed plans for the sale of its cigar business, which will be split from the group to help reduce debt and increase the funds available for investment.

The sales process for Premium Cigars is also reportedly part of the company's wider sale programme and company simplification agenda, from which it hopes it will gain £2 billion by May 2020.

The FTSE 100-listed tobacco giant added that the sale of the cigar business was not as a result of a lack of profit from the division, but simply that the company wants to redefine its market and ensure it's focusing its money and energy in one direction.

"Premium Cigars has performed well over a number of years with good revenue and profit growth; however, it is a unique luxury business with a different consumer base and route to market relative to Imperial's other businesses," a spokesperson said. "The sale of the business provides an attractive opportunity to realise shareholder value."

The company will now seek an appropriate buyer for the company via advisory firm AZ Capital, although it is yet to publish any financial figures and warns that there is no certainty that a transaction will definitely take place.

Despite this, Imperial Brands did confirm that it's making significant progress in other areas of its simplification schedule, but added that tobacco valuations have come under pressure in recent months and that each asset will remain part of the group until the "appropriate value" is realised.

So far the company has achieved additional funds of £280 million from the sale of a portfolio of other tobacco products in the US.

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