Philip Morris Drops Bid For Colombian Firm

Source from:  Fox Business 01/06/2011

Philip Morris International Inc. (PM: 58.50, 0.00, 0.00%) said Wednesday it has dropped its $452 million bid to acquire privately owned cigarette maker Productora Tabacalera de Colombia, or Protabaco, as it was unwilling to comply with the conditions imposed by regulators. "While approval to proceed with the acquisition was granted by the Superintendent of Industry and Trade of Colombia in October 2010, the approval was subject to several significant conditions and constraints that ultimately proved to be too burdensome," the company said in a statement. The Altria Group Inc. (MO: 24.47, 0.00, 0.00%) spinoff's initial takeover bid was rejected by Colombian regulators in June. In October the regulator said for it to be approved, Philip Morris would have to sell Protabaco's Premier brand and another one of the company's choice to a local or foreign competitor and offer to manufacture the brands' cigarettes for the buyer. The regulator was also requiring Philip Morris to keep the market open for tobacco growers and cigarette retailers. "We regretfully have concluded that the transaction, in light of the conditions, would not satisfy the strategic and financial objectives that were originally envisaged and therefore we have decided not to pursue the acquisition of Protabaco," said James Mortensen, the company's president for Latin America and Canada, in the statement. Local news reports Wednesday out of Colombia said Tuesday at midnight was the deadline for Philip Morris to meet the conditions and file a request with anti-trust regulators to move forward with the takeover bid. Because it didn't do so, it or another suitor that might want to buy Protabaco would have to launch a new petition altogether. Officials at the anti-trust regulator's office in Bogota weren't immediately available for comment, but said a statement might be released later Wednesday. Philip Morris said in October it might not move forward with the plans due to the conditions it would have to meet, but said a final decision hadn't been made. Protabaco is the second-largest tobacco company in Colombia. The regulator in blocking the acquisition in June said the purchase would hamper competition in the local market since Philip Morris would control almost 80% of the Colombian cigarette market. In 2005 and 2006, Philip Morris acquired Colombia's largest cigarette maker, Coltabaco, for a little more than $300 million. Enditem