BAT-funded CID buys 39.9% of Bosnian tobacco maker FDS for €21.8mn

By bne IntelliNews September 15, 2016

Austrian investment company CID Adriatic Investments has acquired the 39.9% state-owned stake in Bosnia & Herzegovina’s tobacco maker Fabrika Duhana Sarajevo (FDS) for BAM42.7mn (€21.8mn), Bosnian media reported on September 15.

This is the third state stake in a company offered by the government of the Bosnian Federation – the country’s bigger entity – on the Sarajevo Stock Exchange (SASE) this year. So far, the Federation has attempted to sell its shares in insurance company Sarajevo Osiguranje and blue-chip drug producer Bosnalijek. Both failed as no bidder showed any interest.

A statement on the Sarajevo Stock Exchange website said that at an extraordinary auction on September 15 all 511,477 shares offered by the Federation had been sold. It provided no further details.

However, local TV channel N1 reported on its website that the stake was acquired by the Austrian firm, which is financed by British American Tobaco (BAT). It added that, upon a successful completion of the deal by CID, BAT will enter in exclusive talks with the Austrian company to acquire FDS.

BAT has not yet responded to a request from bne IntelliNews for confirmation.

A possible sale of FDS’ stake to BAT would have to be approved by the shareholders of the Bosnian tobacco maker. September 9 data from SASE shows that the shares were owned by several banks and investment funds. The biggest stake of 8.1% is held by Bosnian unit of Raiffeisenbank, followed by UniCredit Bank Mostar with a 5.9% stake.

BAT has previously invested in the region, buying Croatian conglomerate Adris Grupa’s tobacco unit TDR in addition to other tobacco and retail assets in 2015. The deal was worth €505mn, and included assets in Bosnia and Serbia as well as Croatia. 

BAT CEO Nicandro Durante said at the time that the deal “establishes a sustainable platform to grow our business in Central Europe.”

More recently, in July 2016, BAT raised its stake in Croatian food and retail group Agrokor’s newspaper and tobacco distributing unit Tisak by 16%, according to local media reports. BAT had already taken a 25.8% stake in Tisak through its acquisition of TDR and there is now speculation that BAT could be planning a takeover of Tisak.

FDS operates in the Federation. Bosnia has one more tobacco factory, Fabrika Duvana a.d. Banja Luka, which operates in the country’s smaller entity, Republika Srpska.

In a letter of intent to the International Monetary Fund (IMF), leaked by Bosnian media earlier this year, the Federation pledged to restart the privatisation of state-owned companies, including selling state stakes in Bosnalijek and Sarajevo Osiguranje by the end of July, and FDS and aluminium maker Aluminij Mostar by end-March 2017.


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