British American Tobacco plans to acquire the entire cigarette segment from Skandinavisk Tobakskompagni (ST) and certain snus and roll-your-own tobacco interests.

British American Tobacco will exchange its existing 32.4 per cent stake in ST, at an agreed valuation of DKK 8.95 billion (GBP 904 million) and pay DKK 11.4 billion in cash to settle the transaction. The overall price, equivalent to DKK 20.3 billion, includes the buyout by ST of its snus joint venture partner.
On completion, the transaction will give BAT subsidiaries additional annual sales of approximately 30 billion cigarettes primarily through market leadership in Denmark and Norway as well as approximately one-third of the Swedish market, and it will elevate them from fourth to second place in Poland with around one-third of sales.
ST accounts for more than 60 per cent of cigarette sales in Scandinavia and its cigarettes are sold in over 40 markets. Prince, its premium brand, accounts for annual volumes of about 7 billion cigarettes. The roll-your-own business to be acquired has sales equivalent to around 2 billion cigarettes a year.
The acquisition of a 100 per cent stake in Fiedler & Lundgren will strengthen BAT's snus business and bring in-house manufacturing and additional expertise.
BAT estimates that the businesses to be acquired generated earnings before interest, tax, depreciation and amortisation of DKK 1.81 billion in 2007.  It anticipates that there could be significant operational efficiencies of approximately GBP 60 million per year by 2011 and one-off cash costs of GBP 115 million.
Completion of the transaction is anticipated later this year. 
Skandinavisk Holdings, ST’s controlling shareholder, will retain the cigar and pipe tobacco businesses, roll-your-own and smokeless tobacco in Orlik Tobacco Company and non-tobacco interests in the convenience goods trade and the Tivoli amusement park in Copenhagen. (pi)