Indonesia's Sampoerna plans to license cigarette brands

Indonesia's Sampoerna plans to license cigarette brands

Agence France-Presse Jakarta

Major Indonesian cigarette-maker Sampoerna said on Wednesday that it plans to license the sale of its cigarette brands in markets overseas while selling the brands of its parent Philip Morris.

U.S. firm Philip Morris paid US$5.2 billion for a 97.95 percent stake in Sampoerna earlier this year as it seeks out new consumers in one of the world's only expanding tobacco markets.

Sampoerna said in a published prospectus that it will provide licenses to produce and distribute its cigarettes overseas to affiliated companies under the Philip Morris International group.

"HMS (Sampoerna) may gain revenue in the form of royalties from the sale of HMS group cigarettes abroad without having to invest significantly to enter the overseas markets and without having to share the risk of failure," it said.

It said it will sign license agreements with affiliated companies under the Philip Morris group, allowing them to enter sub-licensing agreements for the production and sale of Sampoerna cigarettes overseas.

Philip Morris will do the same with its own units.

Sampoerna's main brands are Dji Sam Soe, Sampoerna A Mild and Sampoerna Hijau.

Sampoerna said it will also seek to obtain the license to produce and distribute Philip Morris cigarette brands such as Marlboro and Longbeach in Indonesia.

The Indonesian company said it plans to hold an extraordinary shareholders' meeting on Jan. 27 to obtain approval for the plan.

Indonesia, where pungent kretek cigarette made locally from cloves are smoked by up to 70 percent of the country's male population, is one of the world's most profitable tobacco markets.

Smoking accounts for at least 57,000 deaths per year among Indonesia's 220-million strong population.