BATs branches out in Indonesia

17th Jun 2009 07:12

British American Tobacco (BATs) has bought an 85% stake in Indonesia’ fourth largest cigarette maker.The company is paying Rajawali Group $494m (£303m) for the majority stake in PT Bentoel Internasional Investama. The payment is equivalent to IDR873 per Bentoel share, which represents a 20% premium to the closing share price of Bentoel on 15 June.Indonesia is the world’s fifth largest tobacco market by volume and is the top ten by profit. The market is dominated by ‘kretek’ cigarettes, which blend in cloves and other ingredients with tobacco, and account for 94% of the market.John Daly, BATs’ Asia-Pacific director said the transaction ‘represents an excellent strategic opportunity to enter the very large and growing Indonesian kretek market and will provide a platform for future growth.’Bentoel’s earnings before interest, tax, depreciation and amortisation in the 12 months to 31 March 2009 were $53m (£32m). As at the end of March it had net debt of $164m (£101m).