Danish Tobacco Group Sells Cigarette Business

Denmark-based Scandinavian Tobacco Group sold its cigarette activities to British American Tobacco PLC in a $4.1 million deal.

COPENHAGEN, Denmark (AP) — Denmark-based Scandinavian Tobacco Group said Thursday it has sold its cigarette activities to British American Tobacco PLC, the world's second-largest quoted tobacco group in a euro2.7 million (US$4.1 million) deal.
BAT acquired ST's flagship brand Prince and its other products North State, King's Original, Scotsman and Corner Red.
Scandinavian Holding, which controls 65 percent of ST, sold its shares in three companies — House of Prince, J.L. Tiedemanns Tobaksfabrik and Fiedler & Lundgren — to BAT. The companies employ a total of some 2,100 people, of which 730 work in Denmark.
British American Tobacco, whose brands include Kent, Lucky Strike, Kent and Pall Mall, already controls 32 percent of the shares in Scandinavian Tobacco Group. The remaining three percent stakes are held by employees.
The deal is subject to the approval by competition authorities, ST said in a statement.
ST said it would keep its cigar and roll-your-own, or RYO, tobacco activities.
The international markets for cigarettes and RYO products have been significantly consolidated in recent years, said Joergen Tandrup, who chairs both SH and ST.
''ST experiences this as considerable pressure on the business. ST's cigarette and RYO businesses are of such a size and character that we cannot grow through acquisitions of companies, but only by acquiring market shares from our competitors,'' Tandrup said to explain the sale of the three companies.
''By selling now, we ensure the companies a strong position in a large, international company,'' Tandrup added. He said SH had obtained ''a satisfactory price.''
The ST Group, which is headquartered in Copenhagen, produced 27 billion cigarettes in 2007, of which 19 billion were exported.
British American Tobacco, headquartered in London, has brands sold in more than 180 markets.
Last week, BAT was the highest bidder in an auction to buy the cigarette operations of the Turkish state company Tekel. The British group said it offered euro1.17 billion (US$1.72 billion) for Tekel, outbidding three other consortiums. That sale still needs the approval of Turkey's competition board and privatization authorities before it can be completed.
More in Supply Chain