Tobacco Industry: Acquisitions

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Since 1990s, the fall of the Iron Curtain in the East and the fast decline of cigarette market volumes in the West have triggered a series of acquisitions in the Tobacco Industry as the leading companies try to maintain the economies of scale and boost the top-/bottom-line growth. As a result, Tobacco is one of the most consolidated industries in the world – controlled by 5 major international tobacco companies and CNTC (China National Tobacco Corporation: China’s state tobacco monopoly).

The consolidation is still ongoing today as the major tobacco companies continue to compete with each other to acquire the few independent tobacco players left across the globe.

August 2023

UAE’s Global Investment Holding buys a 30% stake in Eastern Company, the largest cigarette manufacturer in Egypt, for $625Mn1,2. The UAE firm will also provide $150Mn for tobacco procurement. PMI and JTI were among the bidders although their offers presented a conflict of interest (see below for further information).

Background information3,4: The Holding Company for Chemical Industries, which owns 50.95% of Eastern Company, received offers from foreign investors for a 30% stake in Eastern. The bidders included JTI, United Tobacco Company (UTC; majority-owned by PMI) and a GCC investor group. The bids of JTI and UTC were around $700Mn (i.e. valuing the total entity at $2.33Bn – or, 60% above the current market capitalization).

The PMI & JTI offers presented a conflict of interest. If PMI won the deal, its market share and influence in the Egyptian tobacco market would increase substantially – especially, considering that PMI already won, at the expense of JTI, the only licence offered by the government to manufacture cigarettes in Egypt (outside the former monopoly, Eastern Company). Moreover, PMI would also have a voice in the production & distribution of JTI’s (and other foreign companies’) brands that are monopolized by Eastern Company. If JTI won, it would become an indirect shareholder in PMI’s Egyptian business as Eastern Company owns ~24% of UTC.

Egypt is home to 18Mn smokers and is the world’s 7th largest cigarette market by volume5 (~100Bn sticks a year). Eastern Company controls more than 70% of the market.

November 2022

PMI announced that 93.1% of Swedish Match shares are now tendered6. Subsequently, PMI initiated a compulsory redemption of the remaining shares (“squeeze-out”) and requested the de-listing of Swedish Match from the stock market (December 2022).

Background information7,8: In May 2022, PMI announced a public offer to Swedish Match shareholders to tender their shares. The original offer: SEK106/share (~$16Bn equity value; ~$17.5Bn enterprise value, 17x consensus 2023 EBITDA). In October 2022, PMI increased its offer to SEK116/share and announced that it will not further increase the price. The offer acceptance period ended on November 4, 2022 and 82.6% of the Swedish Match shares were tendered. PMI further extended the acceptance period to November 25, 2022.

JTI’s 2017-18 Buying Spree9

In August 2017, Japan Tobacco International (JTI) acquired the assets of Mighty Corp for $936Mn (P46.8Bn). Established in 1945, Mighty Corp is the oldest Filipino tobacco company, manufacturing brands like Mighty, King, and Chelsea. Also in 2017, JTI purchased the Indonesian Kretek producers Karyadibya Mahardhika and Surya Mustika Nusantara from Gudang Garam for $677Mn. A year later, in 2018, JTI acquired Donskoy Tabak, Russia’s fourth largest cigarette manufacturer for $1.6Bn.


  1. UAE company purchases 30% stake in Eastern Company, Cabinet – EgyptToday ↩︎
  2. Emirati company buys 30% stake in Egypt tobacco firm Eastern Co. | Reuters ↩︎
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  9. 6 Japanese Companies That Have Acquired Sizable Stakes in Filipino Corporations ( ↩︎

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