BAT to Buy Colombian Cigarette Company

Source from:  Tobacco Reporter 05/27/2011

British American Tobacco has agreed to acquire the privately owned Productora Tabacalera de Colombia (Protabaco), the second largest cigarette company in Colombia, for US$452 million. On completion of the 100 per cent acquisition, BAT would move from third to second place on Colombia's cigarette market, Latin America's fourth largest market, which had total industry sales of about 17 billion cigarettes during 2010. "This investment will strengthen and complement our position in an important market and fill a strategic gap in our Americas region," said Mark Cobben, BAT's director, Americas. Protabaco, whose biggest brand, Mustang, is Colombia's second best selling cigarette with a retail share of about 18 per cent, sold about 5.5 billion cigarettes last year. BAT said that funding for the transaction would be from its existing resources. The transaction represented a multiple of 11.3 times Protabaco's US$40 million domestic 2010 EBITDA on net domestic revenues of US$110 million, it added. The transaction is subject to competition authority approval and final confirmatory due diligence. Philip Morris International announced in 2009 that it had reached agreement to buy Protabaco for US$452 million but earlier this year it pulled out of the deal. At the time of announcing its intention not to pursue the acquisition, PMI said that while approval to proceed with the acquisition had been granted by the Superintendent of Industry and Trade of Colombia in October 2010, the approval had been subject to several significant conditions and constraints that ultimately proved to be too burdensome. Enditem