British American Tobacco (BAT) has agreed to sell its Belgian cigarette distribution business, Lyfra, to Landewyck Group, a privately held tobacco company based in Luxembourg, the Financial Times reports.

BAT declined to comment on the value of the deal, which is expected to be completed later this year. Lyfra had gross assets of EUR 39 million at 31 December 2009 and a turnover of EUR 696 million in 2009. Industry analysts said that although the turnover figure is large, Lyfra is a low margin business and probably made around EUR 14 million in operating profit last year. In 2004, BAT sold a similar distribution business in Italy for ten times earnings before interest, tax, depreciation and amortisation. Applying a similar multiple to Lyfra would give it a valuation of about EUR 140 million. A spokesperson for BAT said the sale of Lyfra, which it inherited from its merger with Rothmans in 2000, is part of the group’s strategy to dispose of non-core assets. (pi)