Break-through in the Prince issue

8/7/1996 7:00 AM EST

BREAK-THROUGH IN THE PRINCE-ISSUE

The subsidiary of SWEDISH MATCH AB, SVENSKA TOBAKS AB, and the Danish
corporation SKANDINAVISK TOBAKSKOMPAGNI A/S have reached an Agreement-in-
Principle on changing the terms of sales and distribution of the cigarette
brand Prince on the Swedish market. The prior agreement, under which Svenska
Tobaks AB has all rights under license, including marketing and sales in
Sweden, is not accepted by the EU Commission as it is regarded as contrary to
competition regulations.

Under the Agreement-in-Principle, Svenska Tobaks AB will continue to
manufacture and distribute Prince while Skandinavisk Tobakskompagni A/S as of
earliest April 1st, 1997, will be handling marketing and sales itself for the
Swedish market. The Agreement-in-Principle requires new agreements which in
detail clarify the rights and obligations of the parties. It is also a
prerequisite that the agreements are officially accepted by the EU Commission.
The new agreements shall be in force until the end of the year 2001, i.e. as
the earlier agreement.

It has been established by the Commission, that the questions on conformity
with the rules of competition have been solved in a way acceptable to the
Commission. The official acceptance is therefore not foreseen as a problem.

The parties will now discuss the Agreement-in-Principle with the Swedish
Competition Authority.

The economical risk that the Prince licence inferred, was emphasised in the
Swedish Match listing particulars published in connection with the
introduction on the stock exchange. The negative effect on the economical
result will be limited to approximately 40 million SEK - everything else equal
- per year as a result of the agreement now made.

-I am very pleased with this agreement says Göran Lindén, CEO of Swedish
Match, in a comment. It means that the ongoing co-operation with Skandinavisk
Tobakskompagni regarding Prince, assuming the Swedish Competition Authority
shares the view of the Commission, will be secured for the full term of the
earlier contract, even though on modified terms. It also means that we
maintain a good profitability for producing and distributing Prince on the
Swedish market, Göran Lindén concludes.

For further information, please contact

Bo Aulin, Senior Vice President, Secretary and General Counsel
+46 8 658 03 64 (Office), +46 70 558 03 64 (Cellphone), +46 8 590 728 43
(Residence), or
Alf Ehinger, Senior Vice President, Investor Relations
+46 8 658 01 73 (Office), +46 708 45 49 42 (Cellphone), or
Roland Perlström, Senior Vice President, Information
+41 22 363 93 11 (Office), +41 89 200 33 51 (Cellphone), +41 22 362 92 93
(Residence)