Croatia's Adris Grupa sells tobacco unit to BAT

By bne IntelliNews June 1, 2015

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Croatian conglomerate Adris Grupa said on June 1 that it has signed an agreement with British American Tobacco (BAT) to sell its tobacco unit TDR in addition to other tobacco and retail assets.

The transaction gives TDR an enterprise value of €505mn (including debts), BAT said in a statement, representing a multiple of 12.5 times 2014 ebitda. Adris Grupa said the equity value of the deal was €505m.

As part of the deal, BAT has committed to keep TDR’s manufacturing facility in Croatia’s Kanfanar operational for at least five years following completion of the acquisition. In case of early closure, it will pay an additional €50mn.

The transaction, which is expected to be completed in October this year, is subject to a number of anti-trust approvals, BAT said. It is also pending approval by Adris Grupa’s shareholders.

BAT added that by combining its existing business in the region together with TDR, it expects to benefit from highly skilled workers, well established brands, enhanced regional leaf processing capabilities, a local high quality factory and print facility and strong relationships with distributors and retailers in these markets.

“This is an exciting acquisition for BAT, which will provide immediate scale in three core markets of Croatia, Bosnia and Serbia and establishes a sustainable platform to grow our business in Central Europe,” BAT’s CEO Nicandro Durante said.

TDR had a market share of 57% in Croatia, of 30% in Bosnia and of 11% in Serbia last year. TDR’s total sales amounted to 8.7bn cigarettes, 67% of which was generated by exports. The company’s revenues totalled HRK1.37bn (€181.1mn) in 2014.

In January, Adris Grupa shareholders approved the strategic restructuring of TDR. The decision was preceded by an analysis of the tobacco business and the risk of continuing operations amid the extreme concentration of the tobacco industry as well as by an analysis of the possible strategic options that will ensure the sustainability of the unit.

According to previous media reports, Japan Tobacco International, Philip Morris and China National Tobacco Corporation had shown interest in the Croatian company.

 

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