By Timothy S. Donahue
Top Takeaways:
Cuba exit: British American Tobacco has completed the sale of its 50% stake in Brascuba Cigarrillos, ending roughly three decades of direct business operations in Cuba.
$60 million deal: BAT agreed to receive $25 million for its Brascuba shares and another $35 million for trading balances involving its Brazilian subsidiaries.
New owner: The stake was sold to Tabagest S.A., a Cuban company BAT describes as an existing Brascuba investor. BAT’s filings do not identify who ultimately controls Tabagest.
After three decades, BAT has smoked its last cigarette in Cuba.
British American Tobacco has completed the sale of its 50% stake in Brascuba Cigarrillos S.A., ending the tobacco company’s longstanding direct presence in Cuba.
The sale to Tabagest S.A., a Cuban company that was already an investor in Brascuba, was completed in February, according to BAT’s half-year report filed with the U.S. Securities and Exchange Commission.
The transaction was agreed upon Dec. 19, 2025, but remained subject to Cuban government approval and regulatory and compliance conditions. “Upon completion, the Group will no longer have a presence in Cuba,” BAT said when it first disclosed the agreement.
That completion has now taken place.
BAT said Brascuba was removed from the group’s consolidated balance sheet in February. The company recorded a net £12 million (US$15.868 million) charge related to the disposal, including £4 million in previously recognized foreign-exchange losses.
BAT’s 2025 annual report provides additional details about the price and describes the transaction as the company’s “planned exit from Cuba.”
Tabagest agreed to pay US$25 million (£19 million) for BAT’s 50% stake in Brascuba. Another US$35 million was expected from the sale and assignment of outstanding trading balances between Brascuba and BAT’s Brazilian subsidiaries. Both amounts were to be settled in euros.
BAT had already taken a substantial write-down on the Cuban operation.
At the end of 2025, the company classified £256 million of Brascuba assets as held for sale, including £208 million in cash and cash equivalents. BAT recorded £231 million in impairment charges for the business, along with £4 million in associated costs.
The company’s accounting reconciliation reduced the estimated recoverable value of those £256 million in assets to £25 million following impairment. BAT also said at the time that it expected to recognize an estimated £58 million loss on the sale and assignment of the intercompany balances upon completion of the transaction.
The sale marks a clean break.
BAT said that after disposing of the stake, it would have no voting rights, no ability to direct Brascuba’s day-to-day activities or to appoint management, and no exposure to future returns from the company.
BAT’s filings do not disclose who ultimately controls Tabagest. The company identifies it only as a Cuban-incorporated entity and an existing investor in Brascuba. However, Cuban media reports that Tabagest operates as a 100 percent state-owned trading company under Tabacuba (the Grupo Empresarial de Tabaco de Cuba), the state-run tobacco monopoly overseen by the Cuban Ministry of Agriculture.
Three decades of cigarettes
Brascuba dates to 1995, when BAT’s Brazilian business, Souza Cruz, formed a joint venture with Cuba’s state tobacco industry. Production began the following year.
The investment came at a time when Cuba was seeking foreign capital after the Soviet Union’s collapse, and Souza Cruz was looking beyond the Cuban cigarette market’s immediate size. “We will have a period of learning with Cuban laws and Cuban tastes,” Souza Cruz finance director Milton Cabral said when the investment was announced in 1995, while expressing confidence that Cuba’s economy would become more open.
The original venture called for approximately US$10 million in investment.
Over the ensuing decades, Brascuba became a major cigarette manufacturer in Cuba, producing brands including Popular and cigarettes bearing well-known Cuban tobacco names such as Cohiba and H. Upmann. Its portfolio has also included brands such as Lucky Strike and Hollywood.
The venture eventually became the foundation for a much larger manufacturing investment.
In 2016, Brascuba began construction of a new cigarette factory in Cuba’s Mariel Special Development Zone. Cuban officials said at the time that the facility was designed to increase Brascuba’s production capacity from about 4 billion cigarettes annually to as many as 15 billion, with roughly 20% of output intended for export.
Brascuba’s Cuban co-president at the time described the project as an “elite” development for Tabacuba and Souza Cruz, while the company’s Brazilian co-president said the partners had renewed their agreement because they believed it was important to continue developing both the Cuban and export markets.
Ten years later, BAT is gone.
The company offered no detailed explanation for the decision in its financial disclosures. It also did not treat the sale as a significant change for purposes of understanding the group’s financial performance, stating that the Cuban business was not material enough to warrant such treatment.
The departure comes as BAT reshapes its broader business around its goal of becoming predominantly smokeless by 2035. In its 2025 annual report, the company said its “human and financial resource allocation decisions will be driven by the geographies and products we prioritize.”
BAT did not say that the strategy was the reason for selling its stake in Brascuba. The factory and Brascuba itself have not been sold or closed.
