Japan Tobacco Inc. has agreed to acquire Russian cigarette maker Donskoy Tabak for about 90 billion Russian rubles, in a deal aimed at reinforcing the buyer's top position in the world's third-biggest tobacco market.
Mutsuo Iwai, president of Japan Tobacco's global tobacco business, said the deal will increase the company's share in the Russian tobacco market to about 40%. In 2017, Japan Tobacco's market share was 33.2%, according to Nielsen data.
"For a number of years now this market has been a cornerstone of our Group's earnings growth," Iwai said, adding that the acquisition is expected to add immediately to Japan Tobacco's profit.
With an estimated 7% local market share, Donskoy Tabak is the fourth-largest tobacco producer in Russia with brands such as Donskoy Tabak, Kiss and Play.
For the year that ended Dec. 31, 2017, Donskoy Tabak reported net income of 1.90 billion rubles, net sales of 15.83 billion rubles and operating profit of 3.47 billion rubles.
The acquisition is expected to be completed by the beginning of the third quarter of fiscal year 2018 after regulatory reviews, Japan Tobacco said.
As of March 15, US$1 was equivalent to 57.44 Russian rubles.
