ITC Dismisses Acquisition Talk as Speculation

Source from:  Tobacco Reporter 08/23/2010

ITC is in talks with Kolkata-based RDB Industries about the possible purchase of the latter's recently de-merged cigarette division for Rs3.0-3.5 billion, according to a story in The Economic Times quoting "sources close to the development". However, the story had an ITC spokesperson dismissing news of the talks as speculation, and the RDB CFO, Sanjay Aggarwal, denying knowledge of such talks. RDB, which acquired National Tobacco Company in 1992, has a plant capacity of more than 20 billion cigarettes a year and owns brands including Regent, Hero and No. 10, which are popular in eastern India. British American Tobacco holds stakes in both ITC and VST Industries, which, taken together, have a market share of 83 per cent, the Times' source was quoted as saying. With RDB, the total market share would be higher. What makes the deal attractive is that there are only six players with tobacco licences in India; so with this deal ITC could secure its complete supremacy even if more Foreign Direct Investment were allowed into this sector, the source added. Enditem