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US tobacco giant offers to buy Indonesia's big cigarette maker
3/15/2005
JAKARTA, Mar 14 (AFP): US tobacco giant Philip Morris today said it had offered to buy Sampoerna, heavy-smoking Indonesia's third largest cigarette maker, in a deal worth 48 trillion rupiah (5.2 billion dollars).
Philip Morris agreed to acquire a 40 percent stake in Sampoerna for 10,600 rupiah a share -- 20 percent higher than the closing price of 8,850 last Thursday -- and offered to buy the remainder for the same amount.
The move, one of the largest tobacco industry acquisitions in recent years, would allow the operating arm of the Altria Group, formerly known as Philip Morris, to tap into an expanding market as global anti-smoking laws and pressure to tackle its harmful effects erode profits.
Some 70 percent of Indonesia's 213 million people smoke and 57,000 deaths a year are blamed on tobacco.
"Our investment in Sampoerna is a great opportunity to significantly expand our business in the world's fifth-largest and growing cigarette market," Andre Calantzopoulos, president of Philip Morris International, said in a statement.
"Today's announcement reflects our confidence in the economic future of Indonesia and its tobacco industry, and positions us for profitable future growth by partnering with a well-managed and successful company that has an outstanding distribution and manufacturing infrastructure."
Sampoerna, which makes kretek or clove cigarettes popular throughout Indonesia, produces net revenues of nearly 1.0 billion dollars annually, the statement said.
Tobacco firms are steady profit earners on Jakarta's stock exchange, which has otherwise struggled to attract foreign cash with corruption, other abuses and high political risk levels hampering efforts to recover from the 1997-98 Asian financial crisis.
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