BAT to Acquire Most of Denmark's ST..

February 28, 2008 - BAT to Acquire Most of Denmark's ST.. British American Tobacco (BAT), the world's second-biggest cigarette maker, struck its second deal in a week with the purchase of Skandinavisk Tobakskompagni's (ST) cigarettes for $4.1 billion (2 billion pounds) as it beat forecasts with an 11 percent rise in 2007 earnings. BAT, which agreed to buy Turkey's state-owned cigarette maker Tekel last Friday, is buying 100 percent of the cigarette assets of privately-owned Denmark-based ST with snus and roll-your-own tobacco. The Danish assets that BAT is buying account for 60 percent of cigarette sales in Scandinavia, led by its Prince brand, and the deal will give BAT market leadership in Denmark and Norway, and around a third of the Swedish and Polish cigarette markets. It will add around 30 billion annual cigarette sales to BAT's 684 billion sales in 2007, or around the same size as Tekel's annual sales of 32 billion cigarettes. BAT Chief Executive Paul Adams added that although Scandinavian markets, like other mature European markets, were seeing cigarette volumes declining around 2 percent a year with public place smoking restrictions and high excise tax, the business it was buying was very profitable with high margins. ST units including Prince cigarettes and Fiedler & Lundgren, the Swedish maker of snus powdered tobacco.

The acquisition of a 100 per cent stake in Fiedler & Lundgren AB will strengthen British American Tobacco’s snus business and bring in-house manufacturing and additional expertise. Fiedler & Lundgren sold almost 16 million tins of snus in 2006/07 with market shares of 6 per cent in Sweden and 4 per cent in Norway. Brands include Granit, Mocca and Metropol.

London-based BAT already owned 32 percent of Soeborg, Denmark-based ST. ST was formed in 1961 by the merger of three Danish tobacco makers, including Chr. Augustinus Fabrikker, founded in 1750, according to the company's Web site. The company merged with a local BAT division in 1971, and its House of Prince is Scandinavia's largest cigarette company. "BAT buys Scandinavian cigarettes as earnings rise" by David Jones, 2/28/2008) BAT has agreed to pay $1.72bn (£870m) to buy Tekel, Turkey's state-owned cigarette maker, in a move which will pit it against Philip Morris International in the world's eighth largest tobacco market. Sixty per cent of Turkish men smoke, making it an attractive market for BAT, which does most of its business in emerging markets. BAT will have 36 per cent of the market in Turkey. "BAT wins auction for Turkey's state tobacco firm with $1.72bn bid" by Karen Attwood, 2/23/2008)