State Tobacco Firm Expecting Bidders

Source from:  Monday, February 18, 2008 turkishdailynews.com.tr ANKARA - Anatolia News Ag 02/21/2008

The countdown to the sale of Turkey's state-run cigarette maker Tekel begins, as final bids in the third privatization attempt are scheduled to be accepted today. The tender includes six cigarette factories of the giant company - in Istanbul, Adana, Ballıca, Bitlis, Malatya and Tokat. Officials said with incentives such as installments with long maturities, they are expecting strong interest in the sale. The price range is expected to be between $1.5 billion and $1.8 billion. The Privatization Board (ÖİB) is also expected to announce the names of the bidders today. If the tender commission is not able to finish the preliminary dissertation, the names of the bidders will be announced tomorrow. High interest expected: According to various press reports and company statements, Doğan Holding, Turkey's biggest media company, Japan Tobacco International (JTI), British American Tobacco (BAT), Imperial Tobacco and Korean Tobacco are interested in Tekel. Doğan Holding is expected to join the bidding together with Citigroup Venture Capital International and Tutsab, a Turkish group of tobacco wholesalers. British and U.S. investment funds are also said to be interested in the company. The privatization process of Tekel dates back to 2003. In that year, JTI offered $1.15 billion for the company, but the sale was canceled, as the Supreme Privatization Board (ÖYK) said the offer did not meet expectations. After the cancellation, the government started restructuring the company. As some enterprises and directorates responsible for sales and distribution were closed, tobacco stocks were trimmed down. In the aftermath of restructuring, the company started to make profit again. However, the second tender was also canceled due to lack of interest. Tekel's cigarette unit currently holds 38 percent of the Turkish cigarette market. The company's net operating profit in 2006 was YTL 2 billion. Tekel currently employs around 13,000 employees, including those working in food and mining sectors. The TDN is a Doğan Media Group publication. Enditem