22nd Century Group, a Clarence company that is developing very low-nicotine cigarettes, has acquired a North Carolina firm in a $3 million deal that will help it make and distribute its cigarettes in the United States.
The acquisition of NASCO Products gives 22nd Century its own federally licensed tobacco manufacturer and makes it a participating member of the 1998 Tobacco Master Settlement Agreement between the tobacco industry and 46 states.
22nd Century makes a range of cigarettes that have varying levels of nicotine, including a very low-nicotine product that has 97 percent less nicotine than the leading “light” cigarettes sold today.
The company also makes a line of research cigarettes that have the same levels of tar as conventional cigarettes but nicotine levels that can vary from very low to very high.
“We intentionally have delayed expansion of the marketing and distribution of our brands in the United States, since the more product we sold, the more difficult and expensive it would be to become a participating manufacturer of the MSA,” said Henry Sicignano, the company’s president.
The company, until now, has used contract manufacturers to produce its cigarettes. Its distribution arm, Goodrich Tobacco Co., had applied in January to become a federally licensed producer and a member of the MSA – goals that the acquisition accomplishes.
22nd Century paid $1 million – $200,000 in cash and $800,000 in stock – to acquire NASCO, which was founded by two former RJ Reynolds Tobacco Co. executives. One of them, Ralph Angiuoli, a former president and chief executive officer of the tobacco giant, will be part of the 22nd Century Group subsidiary that operates the former NASCO business.
22nd Century also is paying $2 million to acquire cigarette-manufacturing machinery.
Once the acquisition is completed, Sicignano said 22nd Century plans to move forward with its plans to sell and distribute the company’s Red Sun and Magic cigarette brands across the country.