New Tobacco Group to be Incorporated in China on Basis of Merger

Source from:  Jinghua News newspaper 11/05/2008

A new large tobacco manufacturing enterprise group named Hongyun Honghe Tobacco Group will be inaugurated in southwest China's tobacco-producing Yunnan Province on November 8, on the basis of merger between Hongyun Group and Honghe Group in the ongoing structural reform of China's tobacco industry. At the end of October, the State Tobacco Monopoly Administration (STMA) approved the restructuring plan of the tobacco industry of Yunnan, under which Hongyun and Honghe will be merged to form Hongyun Honghe, and the Hongta Group - the existing largest Chinese tobacco manufacturer - will take over Zhaotong Cigarette Factory previously owned by Honghe. On August 25, Hongyun and Honghe signed an agreement of intent on their merger in the provincial capital city of Kunming. According to the restructuring plan approved by the STMA, the newly incorporated Hongyun Honghe Tobacco Group will include Kunming, Qujing and Huize Cigarette Factories in Yunnan, Ulanhot Cigarette Factory in north China's Inner Mongolia region, Shanxi Kunming Tobacco Co., Ltd. in north China's Shanxi Province in which Hongyun is holding a controlling stake, Inner Mongolia Cigarette Co., Ltd. in which Hongyun has shares, Honghe Cigarette in Yunnan and Xinjiang Cigarette Factory in northwest China's Xinjiang region. After the merger between Hongyun and Honghe, Hongyun Honghe Tobacco Group and Hongta Group will each have an annual cigarette production capacity of over 4 million cases (200 billion cigarettes), including that of joint-venture operations, the largest for all Chinese tobacco manufacturers. In comparison, Hunan Provincial China Tobacco Industry Corporation in south central China's Hunan Province - the third largest Chinese tobacco manufacturer - has an annual cigarette production capacity of 3.8 million cases (190 billion cigarettes). Enditem