BAT Indonesia buys Rothmans for Rp 210b

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)