Japan Tobacco buys Russia’s fourth-largest cigarette maker
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Japan Tobacco has agreed to buy Donskoy Tabak, Russia’s fourth-largest cigarette maker, for $1.6 billion in a bid to reinforce its leading position in the country.
One of the world’s biggest tobacco companies, whose global brands include Winston and Camel, Japan Tobacco (JT) has set its sights on international markets to counter slowing sales at home and intensifying competition in the e-cigarette market.
JT on Friday said the deal would boost its Russian market share to about 40% from the current 33%, which was already the largest in the country.
The acquisition of Donskoy Tabak, whose brands include Donskoy Tabak, Kiss and Play, will be completed later this year, it said.
“This acquisition demonstrates our commitment to reinforce our number one position in Russia,” JT executive vice president Mutsuo Iwai said in a statement.
The deal will also include JT’s purchase of Greek cigarette maker SEKAP, it said, adding that it has no plan to revise its earnings forecast following the announcement.
Last year JT spent some $2 billion on acquiring major tobacco manufacturers in Asia, including Mighty of the Philippines.
Questions & Answers
Q.What is the primary reason Japan Tobacco is acquiring Donskoy Tabak?
What is the primary reason Japan Tobacco is acquiring Donskoy Tabak?
Japan Tobacco is buying Donskoy Tabak to reinforce its leading position in Russia. This acquisition will increase its Russian market share from 33% to about 40%, countering slowing sales at home and intense competition in the e-cigarette market.
Q.Which brands will Japan Tobacco acquire as part of this deal?
Which brands will Japan Tobacco acquire as part of this deal?
As part of the Donskoy Tabak acquisition, Japan Tobacco will gain control of brands including Donskoy Tabak, Kiss, and Play. The deal also includes the purchase of Greek cigarette maker SEKAP.
Q.How much has Japan Tobacco spent on acquisitions in the last year, including this deal?
How much has Japan Tobacco spent on acquisitions in the last year, including this deal?
Japan Tobacco is spending $1.6 billion on Donskoy Tabak. Last year, the company spent approximately $2 billion acquiring major tobacco manufacturers in Asia, such as Mighty of the Philippines, bringing their recent acquisition total to around $3.6 billion.
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