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JT acquires Donskoy Tabak

15 Mar 2018. Japan Tobacco (JT) has agreed to acquire the Russian cigarette maker Donskoy Tabak in a move JT said will reinforce its leading position in the Russian market, the company said in a press release.

For an estimated purchase price of RUB 90 billion (EUR 1.274 billion), JT said it expects its acquisition of Donskoy Tabak will be completed by the third quarter of the 2018 fiscal year. Donskoy Tabak is Russia’s fourth-largest tobacco company and has an approximate market share of 7 per cent, with cigarette brands such as the eponymous Donskoy Tabak, Kiss and Play being well established in Russia’s value segment, JT said.

Net sales at Donskoy Tabak for the 12 months ended 31 December 2017 totalled RUB 15.825 billion, with operating profit for the same period totalling RUB 3.474 Billion, according to the press release.

Mutsuo Iwai, president of JT’s global tobacco business, said, “This acquisition demonstrates our commitment to reinforce our number one position in Russia. For a number of years now this market has been a cornerstone of our Group’s earnings growth. This transaction will increase our market share to approximately 40 per cent and contribute to the Group’s profit immediately, with synergies expected in the following years.”

Eddy Pirard, president and CEO of JT’s international operating division, Japan Tobacco International, commented in the press release, “Throughout 2017 we have restored our market share in Russia, driven by the success of our Global Flagship Brands, Winston and LD. With DT’s value brands complementing our existing product portfolio and its strong salesforce expanding our distribution network, we will strengthen our overall competitiveness in the country,” said Eddy Pirard, JTI’s President and CEO.