PM Acquires South African Snus Maker

Source from:  Tobacco Reporter 07/03/2009

Philip Morris it is acquiring Swedish Match's South African affiliate SMSA for ZAR1.75 billion ($222.4 million), according to Credit Suisse. SMSA is the market leader in South African pipe and nasal snuff (about 19 percent and 12 percent of total tobacco consumption, respectively) with 2008 net revenues of ZAR687 million and estimated operating profits of about ZAR225 million. The deal is expected to close by the fourth quarter of 2009. According to Credit Suisse, the main benefit of the acquisition lies in the long-term smokeless tobacco opportunity, as South Africa is currently a snus test market for SWMA, making it one of the few potential MST markets outside of North America and Scandinavia. It also strengthens PM's position versus BAT in the country (PM has about a 4 percent cigarette market share compared to about 84 percent for BAT). The South African business is not covered by the joint venture between PM and SWMA, as it is outside of the smokeless tobacco scope of the agreement. Enditem