Japan Tobacco acquires Donskoy Tabak for $1.5 billion

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Japan Tobacco Group said it has agreed to acquire Donskoy Tabak (DT) companies to become the largest tobacco maker in Russia and the third largest tobacco market in the world.

The company said in a statement that the purchase price for the transaction is estimated at around RUB 90 billion (USD 1.6 billion).

“This acquisition demonstrates our commitment to reinforce our number one position in Russia. For a number of years now this market has been a cornerstone of our Group’s earnings growth.

This transaction will increase our market share to approximately 40% and contribute to the Group’s profit immediately, with synergies expected in the following years,” said Mutsuo Iwai, President of the Global Tobacco Business. DT is the fourth largest tobacco company in Russia with a market share of approximately 7% and has established brands such as Donskoy Tabak, Kiss and Play in the value segment, the largest and growing price segment in the country.

“Throughout 2017 we have restored our market share in Russia, driven by the success of our Global Flagship Brands, Winston and LD. With DT’s value brands complementing our existing product portfolio and its strong salesforce expanding our distribution network, we will strengthen our overall competitiveness in the country,” said Eddy Pirard, JTI’s President and CEO.

The transaction is expected to be completed by the beginning of the third quarter of the fiscal year 2018 following regulatory clearance.

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