BAT Indonesia buys Rothmans for Rp 210b

JAKARTA (JP): Publicly listed cigarettemaker PT British American Tobacco (BAT) Indonesia announced on Monday it had agreed to buy 99.99 percent of cigarettemaker PT Rothmans of Pall Mall Indonesia for Rp 210 billion (US$30 million).

The company said the acquisition would be financed with a loan from the BAT Group, which would be repaid with proceeds from a rights issue to be conducted by the company next year.

President of BAT Indonesia Mark Jennings said the acquisition was part of the global merger of British American Tobacco plc and Rothmans International BV.

"I believe the enlarged business of BAT Indonesia following this acquisition will be capable of delivering significantly enhanced value to the company's shareholders," he said in a statement.

He said BAT Indonesia would hold on Dec. 14 an extraordinary shareholders meeting to obtain shareholder approval on the acquisition and related financing arrangements.

The company said the acquisition was expected to strengthen its brand portfolio as well as bolster its market position.

Rothmans has about a 20 percent share in the domestic regular (non-clove) cigarette market with two primary brands Dunhill and Kansas.

BAT Indonesia said the Rp 210 billion outlay for the Rothmans' shares was reasonable in view of the value of Rothman's assets, the popularity of the latter's brands and the potential costs BAT would cut by combining the two businesses.

As of July 31 this year, Rothmans of Pall Mall Indonesia, a unit of Australia's Rothmans Holding Limited, had assets valued at Rp 195.9 billion.

It was previously known as PT Faroka, a cigarettemaker established in 1932 in Malang, East Java. The company changed its name in 1987 to Rothmans of Pall Mall Indonesia.

BAT Indonesia, which is listed on the Jakarta Stock Exchange, is one of the country's oldest cigarette producers with domestic operation starting in 1917.

It produces a number of regular brands including Lucky Strike, Kent, State Express 555, Kent, Benson & Hedges, Ardath and Commodore.

As of Oct. this year, the company had produced a total of 15.40 billion cigarettes.

Its unaudited assets were valued on June 30 this year at Rp 671 billion (US$95 million), up from Rp 454 billion on June 30 last year.

The company recorded an unaudited net income of Rp 59 billion in the first half of this year, as against a net loss of Rp 15 billion in the same period last year. (cst)