Swedish Match in talks with private equity firms to sell STG-Reuters

(Reuters) – Swedish Match AB and Skandinavisk Holding, the owners of Scandinavian Tobacco Group (STG), are in talks with private equity firms about a possible sale of the cigar maker, two sources familiar with the matter said on Friday.

First round bids are due on Dec. 18, the sources said.

Bloomberg reported earlier on Friday that CVC Capital Partners Ltd, Rhone Capital LLC and Pamplona Capital Management LLP were bidding for STG, and that the company could fetch about $2 billion.

Shares in tobacco products maker Swedish Match rose after the news, and closed up 5.1 percent at 257.5 Swedish crowns ($34.51).

The process is being run by JP Morgan. BC Partners is also eyeing the sale, one of the sources said.

BC Partners, CVC and Swedish Match declined to comment. JP Morgan and the other private equity firms were either not immediately available or could not be reached to comment.

STG’s chairman told Borsen newspaper in August that the business was looking at an initial public offering (IPO) on the Nasdaq OMX Copenhagen exchange.

Swedish Match has had the right since October to sell its 49-percent stake in STG after the expiry of a lock-up period.

Since then, the collapse of Danish ship fuel supplier OW Bunker, which listed in March and filed for bankruptcy in November, has killed off the prospects for companies looking to debut on the region’s stock market.

That has improved the competitiveness of private equity funds, which have largely been outpriced by the appeal of stock markets this year.