This acquisition is subjected to required procedures, and is expected to be completed by October 2009. KHB&C processes and sells Brazilin tobaccos, sourced principally from Kannenberg, a leaf producer of flue-cured and Burley tobaccos operating in the Brazilian market for over 60 years. In the past few years, sharp price increases of various crops have caused leaf tobacco costs to stay high and induced volatility in the market. In June, JT had already acquired leaf supplying company Tribac and established JTI Leaf Services , a joint venture with US company Hail & Cotton. The acquisition of Kannenberg and KBH&C is intended to globalise the JT group’s scope of procurement capability by adding Brazil, which is second only to China in tobacco leaf production worldwide. With the exception of Japanese leaf, all other procurement for the JT group will be continued by its global leaf procurement group based in Geneva, into which the two Brazilian companies’ organisations will be integrated progressively, JT says.
On a consolidated basis, the two acquisitions and US joint venture represent an investment of estimated USD 230 million. (ci)