Japan Tobacco Inc. said Thursday it has agreed to acquire
independent U.S. electronic cigarette company Logic Technology
Development LLC.
Terms of the deal, which is expected to close in the third
quarter, weren't disclosed.
The acquisition would give Japan Tobacco the third largest
e-cigarette company in U.S. convenience stores with about a 20%
market share, according to Nielsen data cited by Wells Fargo. It
also would give Japan Tobacco a proven e-cigarette brand that it
can push globally.
The deal is the third major acquisition of a U.S. e-cigarette
brand by a big tobacco company. Altria Group Inc. last year
acquired Green Smoke for $110 million, and Lorillard Inc. in 2012
acquired Blu Ecigs for $135 million. Reynolds American Inc. in 2013
launched its own brand Vuse, which leads the convenience-store
market with about a 33% share. Blu is second with an estimated 22%
market share.
Those brands account for an estimated $1.5 billion of the $3
billion e-cigarette market, according to Wells Fargo. The rest of
the industry is dominated by large, refillable systems called
vaporizers that heat liquid nicotine. Vaporizers and liquid
nicotine, known as "e-liquid" or "juice," are primarily sold at
so-called vape shops.
Adding Logic to its portfolio would make Japan Tobacco a player
in the U.S. vapor market, which is projected to grow 30% this year.
The company expanded its international tobacco business in 1999
when it acquired R.J. Reynolds international operations for $7.8
billion. More than 80% of its revenue comes from tobacco and
cigarette brands it sells world-wide such as Winston, Camel and
Benson & Hedges.
"With the Logic brand and its strong portfolio of products, the
JT Group has a sizable participation in the largest and
fast-growing U.S. e-cigarette market," said Masamichi Terabatake,
Japan Tobacco International's executive vice president. He added
that the company has "global ambitions to become the leader in
emerging products" with Logic and the U.K.-based e-cigarette
company E-Lites, which it acquired last year.
Logic was founded in 2010 by Eli Alelov and Howard Panes. The
company specializes in rechargeable and disposable e-cigarettes
known as "cigalikes" because they are designed to look like
traditional cigarettes.
Japan Tobacco said it plans to retain Logic's management team,
which includes President Miguel Martin, who previously oversaw
sales at Altria. A spokesman for Logic declined to say if Mr.
Alelov or Mr. Panes, who respectively serve as chief executive and
chief operating officers, would continue to work on Logic's
business after the sale closes.
Write to Tripp Mickle at Tripp.Mickle@wsj.com
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