By Timothy S. Donahue
Top Takeaways:
- Portfolio shift: STG has agreed to sell its BREAK and Moro fine-cut tobacco brands to Japan Tobacco Inc. for €176 million, thereby advancing its Focus2030 strategy.
- Strategic focus: STG said the divestment will allow it to focus on higher-growth categories, reduce debt, and increase financial flexibility.
- German market: The transaction includes brands primarily sold in Germany and is expected to close before the end of 2026, subject to customary regulatory approvals.
Scandinavian Tobacco Group (STG) has agreed to sell its BREAK and Moro fine-cut tobacco brands to Japan Tobacco Inc. (JT) for €176 million, marking a significant portfolio move as STG continues to reshape its business under its Focus2030 strategy.
The transaction has a pre-tax enterprise value of approximately US$195 million and is expected to close before the end of 2026, subject to customary closing conditions, including regulatory approvals.
STG said the sale reflects its decision to focus resources on product categories with the strongest long-term growth potential and to transfer the brands to an owner better positioned to develop them.
“With the divestment of BREAK and Moro to JT, we are taking a clear step forward in the execution of our Focus2030 strategy,” STG Chief Executive Officer Niels Frederiksen said. “After careful consideration, we have concluded that the full potential of BREAK and Moro can be better realized under new ownership, under new ownership and we can sharpen our strategic focus on the categories where we see the strongest long-term value creation opportunities.”
The BREAK and Moro brands are primarily sold in Germany and accounted for approximately 4% of STG’s reported 2025 net sales and gross profit before special items, as well as roughly 6% of EBITDA before special items. Fine-cut tobacco accounted for about 12% of the company’s total 2025 net sales.
STG said the proceeds from the transaction will be used to strengthen its balance sheet and provide greater flexibility for future investments. “The proceeds from the transaction will be used to reduce debt and lower our leverage ratio, thereby increasing our strategic and financial flexibility and supporting our commitment to optimising value for shareholders,” Frederiksen said.
Upon completion, STG expects its leverage ratio to fall below its long-term target of 2.5x, and the transaction is also expected to provide a positive free cash flow impact through the transfer of inventories to JT.
As part of the agreement, STG will continue manufacturing the BREAK and Moro products for up to three years under a contract manufacturing arrangement while the company evaluates its long-term manufacturing footprint and production efficiency.
Although the divestment is expected to reduce earnings due to the loss of the brands’ contribution, STG said it does not expect the sale to affect its 2026 guidance for reported net sales growth or EBIT margin before special items.
