Japan Tobacco (JT) announced the acquisition of the company “Donskoy Tabak”. According to the report, the transaction value amounted to about 90 billion rubles ($1.6 billion). It is expected that it will be completed by the beginning of the third quarter of 2018 fiscal year after receiving regulatory approval.
The deal demonstrates the company’s intention to strengthen the position of the number one player in Russia, quoted in a statement by the President of the Russian division Mutsuo Iwai. According to him, the acquisition of “Donskoy Tobacco” will increase the company’s share in the Russian tobacco market to about 40% and “immediately contribute to the profitability of the group.” The group expects a positive synergetic effect in the coming years, the report says.
“Agrokom” (“Donskoy Tobacco” holding company) confirmed the transaction. Negotiations and its preparation were conducted more than a year ago. “Given the objective circumstances prevailing in the market, negative dynamics, increasing regulation and excise policy, growth of the grey market, it has become obvious that the opportunities for the development of certain tobacco enterprises operating outside the major international tobacco companies decreased from year to year”, — stated in the message “Agrokoma”.
Japan Tobacco owns three production sites in Russia, the company’s portfolio includes international brands Winston, Camel, Sobranie, Glamour, etc., as well as Russian brands “Russian Style”, “Peter I”, “Troika” and others.
“Donskoy Tabak” is the fourth largest tobacco company in Russia has a 7% share of the market. The factory was founded in 1857, the production is located in Rostov-on-Don. Among the brands of the company are — “Donskoy Tabak”, Richmond, Senator, Aroma Rich, Kiss.