28th Feb 2008 07:02
British American Tobacco PLC28 February 2008 For immediate release: Thursday, 28 February, 2008 British American Tobacco to acquire leadership in Scandinavian markets British American Tobacco is to acquire 100 per cent of the cigarette businessesof Skandinavisk Tobakskompagni A / S ("ST") and certain snus and roll-your-owntobacco interests. ST accounts for more than 60 per cent of cigarette sales inScandinavia. British American Tobacco will exchange its existing 32.35 per cent stake in ST,at an agreed valuation of DKK 8,947 million (£904 million) and pay DKK 11,384million (£1,151 million) in cash to settle the transaction. The overall price, equivalent to DKK 20,331 million (£2,055 million), includesthe buy-out by ST of its snus joint venture partner. On completion, the transaction will give British American Tobacco's subsidiariesadditional annual sales of approximately 30 billion cigarettes principallythrough: • market leadership in Denmark and Norway and approximately one-third ofthe Swedish market • and elevation from fourth to second place in Poland with aroundone-third of sales. ST's cigarettes are sold in around 40 markets. Prince, its premium brand,accounts for annual volumes of about 7 billion cigarettes in 25 markets - thelargest of which are in Scandinavia. Smaller markets include Germany, Greeceand the Baltic states. The roll-your-own business to be acquired has sales equivalent to around 2billion cigarettes a year. The acquisition of a 100 per cent stake in Fiedler & Lundgren AB will strengthenBritish American Tobacco's snus business and bring in-house manufacturing andadditional expertise. Fiedler & Lundgren sold almost 16 million tins of snus in 2006 / 07 with marketshares of 6 per cent in Sweden and 4 per cent in Norway. Brands include Granit,Mocca and Metropol. British American Tobacco estimates that the businesses to be acquired generatedearnings before interest, tax, depreciation and amortisation of DKK 1,812million (£183 million) in 2007. Paul Adams, British American Tobacco's Chief Executive, said: "This transactionturns our minority stake in a diversified business into full control of veryprofitable cigarette businesses with strong market positions." In addition, British American Tobacco anticipates that there could besignificant operational efficiencies of approximately £60 million per year by2011 and one-off cash costs of £115 million. The transaction, which is subject to approval by the European Commission, isbeing financed through a committed bank facility and is expected to beimmediately earnings enhancing. Completion is anticipated later this year. The gross assets of the businesses and interests which are being acquired areapproximately DKK 6,700 million (£677 million) based on the year-end 30 June2007 balance sheet published by ST. Any future proposals affecting employees would be subject to applicableinformation and consultation requirements. Skandinavisk Holdings, ST's controlling shareholder, will retain the cigar andpipe tobacco businesses, roll-your-own and smokeless tobacco in Orlik TobaccoCompany and non-tobacco interests in the convenience goods trade and the Tivoliamusement park in Copenhagen. Notes to editors British American Tobacco also publishes today its Preliminary financial resultsfor the year ended 31 December 2007. For more about both announcements visit www.bat.com or www.cantos.com forpre-recorded interviews with Chairman Jan du Plessis, Chief Executive Paul Adamsand Finance Director Paul Rayner and watch the live www.bat.com webcast of thepresentation to analysts and investors from 9.30am today. Journalists are also invited to attend today's results news briefing at 11am atBritish American Tobacco's London head office - Globe House, 4 Temple Place,London, WC2R 2PG. • Exchange rate: £1 = DKK 9.89 • British American Tobacco is the world's second largest quoted tobaccogroup by global market share, with brands sold in more than 180 markets. Itssubsidiary companies produced some 684 billion cigarettes through 47 cigarettefactories in 40 countries in 2007 and employed nearly 54,000 people. • Skandinavisk Tobakskompagni is among Denmark's largest internationalcompanies and is the parent company of a number of subsidiaries engaged in theproduction and sales of tobacco products, the Danish convenience goods trade andholds a significant stake in Tivoli. The Group employs approximately 12,000people. • The businesses to be acquired from ST include House of Prince A / S inDenmark, J.L. Tiedemanns Tobaksfabrik AS in Norway and Fiedler & Lundgren AB inSweden. • British American Tobacco is being advised by Deutsche Bank. ENQUIRIES British American Tobacco Press OfficeDavid Betteridge / Kate Matrunola / Cat Armstrong+ 44 (0) 20 7845 2888 (24 hours) Investor RelationsRalph Edmondson / Sharon Woodcock+44 (0) 20 7845 1180 / 1519 Skandinavisk TobakskompagniJorgen Tandrup, Supervisory Board Chairman+45 39 55 62 00 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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