April 2012 was the date when Lorillard, the third largest tobacco company in the US, acquired a leading ecig firm Blu Cigs for $135. Now, it has taken another step forward in embracing the industry of electronic cigarettes as it has just purchased another ecig firm, SkyCig from the UK.
Cost Of Acquisition
SkyCig was bought by Lorillard for £30 million or roughly $49 million. This acquisition is still part of the tobacco firm’s plan to establish global presence and reputation in this emerging category.
Lorillard is a tobacco company based in Greensboro. NC. It has previously stated that another £30 million will be added to the initial investment later in 2016, provided that SkyCig can meet its benchmarks on financial performance.
CEO Murray Kessler noted in his statement that they have a global mission to become the foremost and the best in this category of electronic cigarettes.
Worthy Of Big Tobacco’s Attention
Lorillard is indeed the first tobacco firm to have ventured on ecigs. Following after its footsteps are Reynolds American and Altria from US; British American Tobacco and Imperial Tobacco from UK.
At present, electronic cigarettes have reached total revenue that is only 1% of the total worth of tobacco industry. Yet, tobacco sales have been sharply dropping because more and more smokers are believed to be making the transition from the analogs to the digital.
Financial analysts forecast that in a decade’s time, ecigarettes will surpass their paper-wrapped relative. Ecig markets in US and UK seem to be having a similar pace of development.
Stifel Nicolaus, an analyst from Chris Growe stated that this new acquisition will only give a small percentage of profit to Lorillard. However, this is still an important move since it now provides Lorillard with another strong foothold as it strives to attain success in the international ecig market.
According to Kessler, they believe that ecigs are the most important THR option for smokers. They are also looking forward in the near future to work with worldwide regulators in confirming this belief.
SkyCig will be operating as separate subsidiary of the tobacco firm and noted that it plans to keep its present management team and maintain its Great Britain locations.