Japan Tobacco Buys Gallaher for $18bn

Source from:  theaustralian.news.com.au Jonathan Soble, Tokyo August 13, 2007 08/13/2007

JAPAN Tobacco, the world's third biggest cigarette maker, has said that its acquisition of Gallaher would generate $US400 million ($475.6million) in cost savings and other synergies by 2010, helping drive profit growth in its increasingly vital overseas business. The Japanese company's pound stg. 7.5 billion ($17.9billion) takeover of Britain-based Gallaher, completed in April, has helped it close the gap with second-ranked British American Tobacco and leader Altria, in a rapidly consolidating industry. The company expects to make 70 per cent of its sales outside Japan this year, compared with just under 60 per cent before the acquisition. At its first quarter results briefing yesterday, Japan Tobacco said it expected the integrated international business to generate earnings growth before interest, taxes, depreciation and amortisation of more than 10 per cent. The company raised its group-wide net profit forecast for the year to next March by 38 per cent to Y246 billion ($2.4 billion) and increased its operating profit forecast by a quarter, reflecting the added Gallaher business. Gallaher's brands include Benson&Hedges and Silk Cut. Enditem