BAT Acquires ST's Cigarette Businesses

Source from:  tobaccojournal.com 28 Feb 2008 02/29/2008

British American Tobacco is to acquire 100 per cent of the cigarette businesses of Skandinavisk Tobakskompagni (ST) and certain snus and roll-your-own tobacco interests. ST accounts for more than 60 per cent of cigarette sales in Scandinavia. British American Tobacco will exchange its existing 32.35 per cent stake in ST, at an agreed valuation of DKK 8,947 million (GBP 904 million) and pay DKK 11,384 million (GBP 1,151 million) in cash to settle the transaction. The overall price, equivalent to DKK 20,331 million (GBP 2,055 million), includes the buy-out by ST of its snus joint venture partner. On completion, the transaction will give British American Tobacco's subsidiaries additional annual sales of approximately 30 billion cigarettes principally through market leadership in Denmark and Norway and approximately one-third of the Swedish market and elevation from fourth to second place in Poland with around one-third of sales. ST's cigarettes are sold in around 40 markets. Prince, its premium brand, accounts for annual volumes of about 7 billion cigarettes in 25 markets – the largest of which are in Scandinavia. Smaller markets include Germany, Greece and the Baltic states. The roll-your-own business to be acquired has sales equivalent to around 2 billion cigarettes a year. The acquisition of a 100 per cent stake in Fiedler & Lundgren will strengthen British American Tobacco's snus business and bring in-house manufacturing and additional expertise. British American Tobacco estimates that the businesses to be acquired generated earnings before interest, tax, depreciation and amortisation of DKK 1,812 million (GBP 183 million) in 2007. British American Tobacco anticipates that there could be significant operational efficiencies of approximately GBP 60 million per year by 2011 and one-off cash costs of GBP 115 million. Completion of the transaction is anticipated later this year. Skandinavisk Holdings, ST's controlling shareholder, will retain the cigar and pipe tobacco businesses, roll-your-own and smokeless tobacco in Orlik Tobacco Company and non-tobacco interests in the convenience goods trade and the Tivoli amusement park in Copenhagen. Enditem