Tuesday, February 26, 2008

British American Tobacco wins Turkish privatisation auction

British American Tobacco PLC (AMEX:BTI) said it has won the auction for the cigarette business assets of Tekel, the Turkish state-owned tobacco company, with a successful bid of 1.72 bln usd.

The transaction is subject to approval by Turkey's competition board and ratification by the Turkish Privatisation High Council. The deal's completion is expected later this year, BAT said.

The deal, if successful, will lift BAT's share of the Turkish market to 36 pct. Tekel's brands account for around 32 bln cigarettes, or around 29 pct of the market, and the company has estimated EBITDA earnings of 151 mln usd in 2007, BAT said.

Annual savings of around 30 mln by the third full year are estimated for the enlarged business, driven largely by improvements in the supply chain and savings in administrative costs, BAT said.

BAT predicts that the transcation will be earnings enhancing by 2009.

Paul Adams, BAT CEO, said: 'This investment, coupled with the country's rapid economic growth, will transform our position in the world's eighth largest cigarette market.'
Copyright Thomson Financial News Limited 2007. All rights reserved.

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.