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Johannesburg - British American Tobacco (BAT, BTI) said on Wednesday that it has acquired from Rajawali Group and other shareholders an 85% stake in Indonesia's fourth largest cigarette maker PT Bentoel Internasional Investama Tbk for $494m.
The price is equivalent to IDR873 per share, a premium of 20% over Bentoel's closing price of IDR730 per share on June 15 2009. A public tender offer for the remaining shares will be announced in due course and is expected to be completed by the end of August 2009, BAT said.
Assuming that all the shares are tendered, the overall transaction would value 100% of Bentoel at approximately $580m.
John Daly, British American Tobacco's Asia-Pacific Director, said: "This transaction represents an excellent strategic opportunity to enter the very large and growing Indonesian kretek market and will provide a platform for future growth."
Indonesia is the world's fifth largest tobacco market by volume, with sales of around 250 billion cigarettes a year, and a global top ten market by profit.
The kretek segment accounts for about 93% of the market. Kreteks are cigarettes made from tobacco and cloves and are produced by machine or hand rolled. Bentoel's key kretek brands include Star Mild, X Mild and Sejati.
In 2008 Bentoel sold 17.7 billion cigarettes, representing approximately 7% of the market.
BATs existing business, PT BAT Indonesia Tbk, has an approximate two per cent market share and competes only in the white cigarettes market.
- I-Net Bridge