Seita Announces Agreement to Acquire U.S. Cigar Maker Consolidated Cigar Holdings Inc.

PARIS and FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Dec. 16, 1998-- SEITA S.A. (SBF Paris Bourse: Seita), France's largest producer and distributor of tobacco products, announced today that it has signed a definitive agreement to acquire Consolidated Cigar Holdings Inc. (NYSE: CIG), the leading cigar maker in the U.S. in revenue terms, for $17.85 per share, net to the seller in cash.

Consolidated Cigar Holdings, which had 1997 sales of $299 million (around FRF 1.7 billion) and net income of $54 million (around FRF 300 million), employs 5,400 people, including 550 in the United States. The company is headquartered in Fort Lauderdale, Florida and operates eight plants--two in the United States, two in Puerto Rico, two in Honduras, one in the Dominican Republic and one in Jamaica.

Consolidated Cigar realizes almost all its sales in the United States, where it has a market share of approximately 24% with such brands as Dutch Treats, Antonio y Cleopatra, Dutch Masters, Muriel and Backwoods, Don Diego, Te-Amo, Montecruz and Henry Clay. It also holds the US marketing rights to the prestigious H. Upmann, Montecristo and Por Larranaga brands, which are made from tobacco grown outside of Cuba.

With FRF 18.4 billion (approximately $3.1 billion) in sales(1) and FRF 827 million (approximately $149 million) in net income in 1997, Seita is France's leading tobacco products company. Its shares are listed on the Paris Bourse. It sold 64.3 billion cigarettes in 1997, of which nearly 50% were outside of France. In the cigar segment, the company is number one in France, with 38% of the market, number four in Europe and number seven worldwide. It is strategically committed to expanding in the global marketplace, supported by sustained growth in sales and an active acquisition program.

The United States is the world's largest cigar market. The Consolidated Cigar acquisition will provide Seita with extensive expertise in the premium, hand-rolled cigar market and will enable it to develop synergies in tobacco purchasing and in the production and marketing of its Pleiades brand in the United States. In addition, the transaction will make Seita the world's leading cigar company, with total volume of 1.6 billion cigars. In this way, it will create, in line with Seita's strategic vision, a second strong business alongside the cigarette division, which is focusing on the international development of the Gauloises Blondes brand.

The agreement calls for a wholly owned subsidiary of SEITA to commence a tender offer no later than December 22, 1998 for all of Consolidated Cigar's outstanding shares. The offer will be conditioned upon, among other things, the expiration or earlier termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the tender of approximately 65% of the shares of common stock of Consolidated Cigar outstanding. Following the consummation of the offer, SEITA's subsidiary will be merged with Consolidated Cigar and any remaining shares will be converted into the right to receive $17.85 per share in cash.

As a part of the transaction, Mafco Consolidated Group Inc., a wholly owned subsidiary of MacAndrews and Forbes Holdings Inc., has agreed to tender all of its Consolidated Cigar shares, representing approximately 65% of the outstanding shares, and has granted SEITA an option to purchase all its Consolidated Cigar shares under certain circumstances.

The closing is expected to occur in the first quarter of 1999.

The acquisition of 100 percent of the shares would represent an investment of approximately $531 million. The total value of the transaction is approximately $730 million, including assumed debt.

Theo Folz, Consolidated Cigar's current President and Chief Executive Officer, will continue to manage the company.

Consolidated Cigar will be from 1999 fully integrated into Seita's accounts. According to present expectations, after amortization of goodwill, the new unit is expected to make a positive contribution to consolidated income in the first year.

The tender offer will be made only pursuant to an offer to purchase and related documents to be filed with the U.S. Securities and Exchange Commission.

(1) Economic sales, i.e. sales of Seita-produced products plus

distribution revenues - FRF 7.2 billion

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            The Consolidated Cigar Holdings Brand Portfolio

                          Mass-Market Cigars

                          Antonio y Cleopatra
                               Backwoods
                             Dutch Masters
                             Dutch Treats
                              El Producto
                                Muriel

                            Premium Cigars

                    Cabanas                Montecruz
                   Don Diego             Por Larranaga
                   H. Upmann             Primo del Rey
                   Henry Clay            Royal Jamaica
                   La Corona             Santa Damiana
                 Las Cabrillas             Santa Rosa
                  Montecristo                Te-Amo