Hongyun Group and Honghe Group, two major tobacco firms based in southwest China's Yunnan province, plan to merge to form the world's fourth-largest cigarette maker by volume.
Hongyun Group posted 29 billion RMB (USD 4.2 billion) in revenue in 2007 and Honghe reported RMB 16 billion according to their respective company websites. The merged company would be known as "Hongyun Honghe Tobacco Group Company Ltd" and would have production facilities in Yunnan and the northwestern Xinjiang region, both tobacco-growing areas according to the Business Herald.
The semi-official China News Service said if the deal were approved, the new company would become the world's fourth-largest tobacco producer in terms of number of cigarettes sold, after Philip Morris International, British American Tobacco and Japan Tobacco. However, according to Reuters, the two companies' combined revenues are less than 30 per cent of Imperial's revenue for the year ended 30 September 2007.
The deal still requires government approval. The merger is part of a consolidation of the country's fragmented tobacco industry, the world's largest cigarette producer and consumer with a growing market of more than 300 million smokers. (pi)