DIMON Incorporated announced today that it has signed a definitive agreement to
acquire 100 percent ownership of Intabex Holdings Worldwide S.A. (Intabex), the
world's fourth largest leaf tobacco dealer with annual sales of approximately
$700 million.
Intabex is a privately-owned Luxembourg holding company with coordination and
service offices in Wokingham, England, near London. It owns and operates leaf
tobacco buying, processing and exporting operations in principal tobacco markets
around the world including the United States, Brazil, Argentina, Malawi, Italy
and Thailand. Additionally, through an affiliated company in Zimbabwe whose
tobacco interests DIMON is acquiring separately, Intabex is a major supplier of
Zimbabwean and other African grown tobacco to the cigarette industry. An
Intabex subsidiary, Compania de Filipinas (CdF), is one of the two major
suppliers of premium cigar leaf and other dark air-cured tobaccos to the
resurgent cigar industry in the United States and Europe.
The aggregate purchase price for Intabex, the Zimbabwe assets and other rights
being acquired will consist of two million shares of DIMON common stock, $140
million in 10-year, 6.25 percent subordinated debentures convertible into 4.866
million DIMON shares at $28.77 per share, and $79.25 million in cash.
Intabex is principally owned by Folium, Inc., an investment company, and
Tabacalera S.A., the Spanish cigarette company. In addition to becoming a
DIMON shareholder, Tabacalera will continue with its existing supply agreement
to obtain its leaf tobacco requirements through DIMON. Mr. A. C. B.
"Tony" Taberer, the current Chairman of Intabex and an affiliate of
Folium, Inc., will become a director of and consultant to DIMON and will continue
as a non-executive Chairman of Intabex. Mr. Taberer is a former Tobacco
International man of the year who has nearly 40 years of experience in the
tobacco industry.
Claude B. Owen, Jr., DIMON's Chairman and Chief Executive Officer, said his
company's board and management group was "very pleased and enthusiastic over
the opportunities which the Intabex acquisition brings to DIMON. We proved to
ourselves with the merger of Dibrell and Monk-Austin which created DIMON in 1995
that tremendous cost savings and synergies can be obtained by consolidation within
the leaf tobacco industry. The fact that Intabex became available at this time
offered DIMON a unique and unprecedented opportunity to repeat the same sort of
cost cutting exercise which DIMON itself just completed this year."
"While we are generally reluctant to use equity in an acquisition,"
Owen continued, "we believe that the significant and immediate benefits
from this transaction will cause earnings per share to increase rather than
being dilutive. Having just completed a restructuring of DIMON's capital
structure, we also did not want to add significant new senior debt to our
balance sheet at this time. We are confident that the free cash flow to be
generated by DIMON and its new Intabex subsidiary will from day one justify
this investment decision."
In addition to increasing significantly DIMON's presence in certain key
tobacco sourcing areas such as Argentina, Brazil, Malawi, Zimbabwe and the
U.S., this acquisition will add new sources for cigarette leaf for DIMON such
as Thailand, Sri Lanka and the emerging areas within Africa. The CdF entities
in Latin America and Asia which supply cigar leaf tobacco also represent new
sources of supply for DIMON.
Mr. Owen also stated that "while elimination of redundancies in overhead
and in certain overlapping operations will be a major benefit from this
acquisition, Intabex has a talented and entrepreneurial management team which
has made it the fastest growing company in the leaf tobacco industry over the
last few years. The addition of Intabex's significant international management
presence to DIMON's existing worldwide group will enhance DIMON's efforts to
create a truly global management organization."
The definitive agreement has been approved by the DIMON board of directors and
by Intabex's shareholders. DIMON expects to consummate the acquisition on April
1, 1997. The parties have received early termination of the waiting period under
the Hart-Scott-Rodino Antitrust Improvement Act, although the transaction remains
subject to anti-trust clearance in certain other countries.
The forward-looking information contained in this release is included pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of 1995
and is subject to risks and uncertainties. Achievement of anticipated earnings
per share and free cash flow increases relating to the acquisition are dependent
upon the timely realization of cost savings and synergies and the maintenance of
Intabex's relationships with customers and suppliers. Delays or unanticipated
obstacles in rationalizing operations or loss of significant customer orders or
suppliers support may significantly slow or reduce the amount of any earnings
benefit. For additional information regarding factors that could affect DIMON's
financial condition and results of operations generally, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Factors
that May Affect Future Results" in DIMON's Annual Report on Form 10-K for the
year ended June 30, 1996.
DIMON is an international company engaged in two business segments - purchasing,
processing, storing and selling leaf tobacco and importing and distributing fresh
cut flowers. With sales in excess of $2.1 billion in 1996, DIMON is the second
largest leaf tobacco dealer as well as the largest importer and exporter of fresh
cut flowers in the world.