EU - British American Tobacco (BAT) on Monday announced that it had agreed to a multimillion-euro deal to acquire TDR and other tobacco and retail assets from Adris Grupa in a bid to expand its presence in central Europe.
In a statement, the tobacco giant said the acquisition had a total enterprise value of €550m and was subject to a number of antitrust approvals and Adris shareholder consent.
The dual-listed company said TDR was the leading independent cigarette manufacturer in central Europe with a presence in the Croatian, Bosnian and Serbian markets.
BAT said that by combining its existing businesses with TDR, it expected to boost its regional leaf-processing capabilities and strengthen its relationships with distributors and retailers in central Europe.
"This is an exciting acquisition for BAT, which will provide immediate scale in three core markets of Croatia, Bosnia and Serbia and establish a sustainable platform to grow our business in Central Europe," CE Nicandro Durante said.
BAT’s business model is built on being able to counter dwindling cigarette volumes with pricing power — especially in its Global Drive Brands such as Kent, Lucky Strike, Pall Mall, Dunhill and Rothmans.
While some market commentators have argued against investing in a shrinking tobacco market, BAT has underlined its confidence in its strategy and future financial performance by consistently increasing dividends to shareholders.
The world’s second-largest cigarette maker produces about 27-billion cigarettes a year, of which 70% are for the domestic market and 30% for export. It also exports metallised paper and cut rag tobacco.
At 9.43am the share was up 1.21% to R682, valuing the company at about R1.4-trillion.