Turkish Tobacco Firm Tekel Goes Under Hammer

Source from:  uk.reuters.com Feb 22 (Reuters) 03/04/2008

Turkish state-owned cigarette company Tekel, which Ankara has been trying to sell since 2003, is due to be auctioned on Friday in a televised tender at 1300 GMT. The first major Turkish privatisation of the year, Tekel is being sold via an asset-only sale. The package includes six factories in Istanbul, Adana, Bitlis, Malatya, Samsun-Ballica and Tokat, along with Tekel's brands, which include Tekel 2000. Analysts estimate Tekel's market share at 29 percent in 2007, having been overtaken by Altria's (MO.N: Quote, Profile, Research) 41 percent. Tekel's share has fallen from around 60 percent when Ankara first said it planned to privatise the firm in 2001. Last year's sales figures have not been made public. Business daily Referans said on Monday a sale price of $1.5 billion to $1.8 billion was expected. Broker JP Morgan valued Tekel last year at $1.0-1.6 billion. Turkey, a European Union candidate, is the eighth-biggest cigarette market in the world. The sale comes just weeks after Turkey's parliament approved a law banning smoking in public places -- a major change in a country where statistics show some 60 percent of men smoke. In a country of 75 million people, 25 million smoke, puffing 115 billion cigarettes a year. A smoking ban in public buildings is due to take effect in May, and a wider ban including bars and restaurants starts in mid-2009. Turkey also raised a special consumption tax on tobacco this year. In 2003 Japan Tobacco offered $1.15 billion for Tekel but Ankara cancelled the tendering, saying bids were unsatisfactory. There were no bids in a 2004 tendering. Closed-envelope bids were submitted on Monday by: - British American Tobacco (BATS.L: Quote, Profile, Research) - Turkish energy-to-media conglomerate Dogan Holding (DOHOL.IS: Quote, Profile, Research) in a consortium with Citi Venture Capital International (CVCI) and Turkish cigarette wholesaler Tutsab. - Private equity firm Cinven [CINV.UL] with a group of Turkish businessmen under the group name of Strand Investment. - Unlisted Turkish builder Limak Insaat with PI Turkey, a private investment fund of Morgan Stanley (MS.N: Quote, Profile, Research). Citigroup is advising on the sale. (Reporting by Emma Ross-Thomas; Editing by Greg Mahlich) Enditem