Cigarette industry news : Japan Tobacco (JT), a Japanese government-controlled cigarette manufacturing company has made a deal to acquire Russian tobacco company Donskoy Tabak (DT) for about RUB90 billion ($1.6 billion).

Japan Tobacco acquisition of Donskoy Tabak is to help the Japanese firm to strengthen its leading position in Russia, which is among the top three tobacco markets in the world.

Donskoy Tabak with a market share of around 7%is considered to be the fourth largest tobacco company in Russia. It is the owner of well-known cigarette brands like Donskoy Tabak, Play and Kiss.

Commenting on Japan Tobacco acquisition of Donskoy Tabak, Mutsuo Iwai – President of the Global Tobacco Business, Japan Tobacco, said: “This acquisition demonstrates our commitment to reinforce our number one position in Russia. For a number of years now this market has been a cornerstone of our Group’s earnings growth.

“This transaction will increase our market share to approximately 40% and contribute to the Group’s profit immediately, with synergies expected in the following years.”

Donskoy Tabak had net sales of $278 million and a profit of $61 million in the financial year 2017.

Japan Tobacco acquisition of Donskoy Tabak is likely to be wrapped by the start of the third quarter of 2018 subject to regulatory clearance.

Eddy Pirard, Japan Tobacco International President and CEO, commenting on Japan Tobacco acquisition of Donskoy Tabak, said: “Throughout 2017 we have restored our market share in Russia, driven by the success of our Global Flagship Brands, Winston and LD.

“With DT’s value brands complementing our existing product portfolio and its strong salesforce expanding our distribution network, we will strengthen our overall competitiveness in the country.”

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