Indonesia: Gudang Garam Set To Sell Subsidiaries To Japan Tobacco For IDR9.02 Tln

Source from:  Netralnews 09/07/2017

Gudang Garam, one of Indonesia's largest tobacco companies, has agreed to sell its fully-owned subsidiaries Karyadibya Mahardika (KDM) and its distributor Surya Mustika Nusantara (SMN) to Japan Tobacco Inc (JT Group).

The sale of shares worth US $677 million (IDR9.02 trillion) is expected to be completed in the fourth quarter of this year. JT Group will also take over the company's debt of US $323 million, bringing the total agreement to reach US $1 billion.

JT Group has developed its empire through a number of acquisitions. The company paid EUR 35 million for 98.5 per cent Senta Tobacco Industry in May 2006, and invested more than US $10 million since then.

In September 2015, it was announced that the company would purchase the rights of Natural American Spirit outside the US for US $5 billion.

According to the report, JT Group is currently in talks for a possible deal of US $890 million to buy Mighty Corp.'s assets, a Philippine cigarette manufacturer "accused of tax evasion of billions of pesos".

In Indonesia, JT Group is mainly involved in conventional cigarette business. The company said the deal would soon provide "scale and attendance at the national level in the Indonesian kretek market."

"We are excited to enter the Indonesian kretek market nationally by utilizing KDM's supply chain, including procurement and production, as well as the SMN's extensive distribution network," said Mutsuo Iwai, Executive Vice President and President of Tobacco Business.

"This will be an important expansion of our geographical footprint in emerging markets for sustainable growth in the future, and this is our first significant acquisition in Southeast Asia and is a great opportunity for us to further expand our business in the fast growing region," he added. .

KDM operates through nine kretek cigarette production facilities in Java and sells its products throughout Indonesia through SMN. Both of these entities employ approximately 7,500 people.

Commenting on the purchase, JT Group president and CEO Eddy Pirard said, "I am confident that KDM's excellent kretek products and local expertise and a strong SMN distribution platform, and with JTI's international insights will further strengthen our growth in Indonesia. welcome all employees into our company. "

Data show that Indonesia has the second largest cigarette market in the world after China, which sold about 316 billion cigarettes last year.  Enditem