South American deal for British American Tobacco

London-headquartered British American Tobacco (BAT) has agreed to acquire a 100 per cent stake in Colombian tobacco business Productora Tabacalera de Colombia S.A.S (Protabaco).


London-headquartered British American Tobacco (BAT) has agreed to acquire a 100 per cent stake in Colombian tobacco business Productora Tabacalera de Colombia S.A.S (Protabaco).

London-headquartered British American Tobacco (BAT) has agreed to acquire a 100 per cent stake in Colombian tobacco business Productora Tabacalera de Colombia S.A.S (Protabaco).

The $452 million (£277 million) deal brings to BAT the second largest cigarette company in Colombia.

Finance for the purchase is on a debt and cash free basis.

Mark Cobben, Americas director for BAT, comments: ‘This investment will strengthen and complement our position in an important market and fill a strategic gap in our Americas region.’

According to a statement Protabaco sold 5.5 billion cigarettes in 2010, accounting for one third of the domestic market.

The acquisition comes in the same month that BAT published a report conducted by Deloitte that found that increasing the size of health warnings on cigarette packs and introducing graphic warnings has not reduced tobacco consumption.

The report was commissioned following the announcement by the Australian government that it was to make tobacco product plain packaging law in 2012.

BAT, which employs 60,000 people, produces cigarettes for brands such as Dunhill, Kent, Pall Mall and Lucky Strike.

The deal is the first for BAT since its February 2008 purchase of Scandinavian business Skandinavisk Tobakskompagni A/S.

Rothschild advised British American Tobacco on the deal.

Todd Cardy

Todd Cardy

Todd was Editor of GrowthBusiness.co.uk between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital.

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