Chinese Enterprises Expected to Merge to Form World's Fourth Largest Tobacco Manufacturer

Source from:  China News Service 08/28/2008

Hongyun Group and Honghe Group in southwest China's tobacco-producing Yunnan Province - two large tobacco manufacturing enterprises in China - signed an agreement on merger and reorganization on August 25, signifying that the two are expected to merge to form the world's fourth largest tobacco manufacturer. The agreement is subject to review and approval by the State Tobacco Monopoly Administration (STMA) - the regulator of China's tobacco industry. Analysts believe that after the merger, the newly formed tobacco manufacturer will have an annual cigarette production capacity of 4.5 million cases (225 billion cigarettes), only after that of Philip Morris, British American Tobacco and Japan Tobacco Inc. If so, it will replace Imperial Tobacco to become the world's fourth largest tobacco manufacturer. In 2005, Yunnan Province - known as the kingdom of tobacco in China - started a large-scale reform of the provincial tobacco industry. After a process of converting the previous nine cigarette-making enterprises in the province into four and then converting the four into three, there formed in Yunnan three big tobacco manufacturing enterprises - Hongta Group, Hongyun Group and Honghe Group. In May 2007, the former Honghe Cigarette Factory and Zhaotong Cigarette Factory in Yunnan and the former Xinjiang Cigarette Factory in northwest China's Xinjiang Region merged to form the current Honghe Group, thus giving rise to the structure of coexistence of the three big tobacco manufacturing enterprises of Hongta, Hongyun and Honghe in Yunnan Province. It was reported that the big tobacco manufacturer to be formed on the basis of the merger of Hongyun and Honghe has been tentatively named Hongyun-Honghe Tobacco Group Co., Ltd., which will have under it eight cigarette making enterprises within or outside Yunnan Province - Kunming, Qujing, Honghe, Zhaotong and Huize Cigarette Factories and Kunming Cigarette Factory's branch enterprise in Yunnan, Xinjiang Cigarette Factory in Xinjiang and Ulanhot Cigarette Factory in north China's Inner Mongolia Region, with shares to be held or acquired by Kunming Cigarette Factory's subsidiaries in Shanxi Province in north China and Inner Mongolia. It will mainly produces cigarettes of such famous brands as Yunyan, Honghe, the Red Camellia, the Stone Forest and the Little Panda. Enditem