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Japan’s JT Buys 40% Stake In Ethiopian Tobacco Monopoly For A Record $510M

Japan Tobacco Inc. (JT), the seller of Camel and Winston cigarettes outside the U.S., announced on Sunday it had won a bid to buy 40 percent of the National Tobacco Enterprise S.C. from the Ethiopian government for a record $510 million.

JT said in a press release (in Japanese) that it has signed a share purchase agreement of $510 million with the Ethiopian Government for 40% of the total shares in the country’s tobacco monopoly after submitting a successful bid last May.

“The JT Group is delighted to be entering the Ethiopian market where we currently have no presence,” said Mutsuo Iwai, executive vice president and president of the tobacco business.

“Ethiopia will be an important expansion of our geographic footprint in emerging markets. As the largest shareholder, we expect to be able to exert significant influence over the direction of the company. The country is currently experiencing double-digit economic growth, with industry volume also expected to continue to increase.” Iwai added.

The more than half a billion dollar bid by the publicly listed Japanese company was the highest offer ever made for any Ethiopian state-owned enterprise, Addis Fortune reported.

It was more than double its closest rival British American Tobacco – maker of brands such as Rothmans and Dunhill, which offered $230 million for the same stake, Bloomberg reported in May.

Other companies that were involved in the bid included Phillip Morris International, known for Marlboro and a Chinese company—China Logistics Company Ltd. They were among the five bidders, including an unnamed individual from Niger.

The National Tobacco Enterprise S.C., a company established in 1942 as the Imperial Ethiopian Tobacco Monopoly, is one of the four public companies the Ethiopian government said it will privatize in 2016.

The country’s Ministry of Enterprises said in March it plans to sell some of governments shareholding in Bahir Dar Textile S.C., Kombolcha Textile S.C., National Tobacco Enterprise S.C. and Ethiopian Crown Cork and Can Manufacturing Industry S.C.

National Tobacco Enterprise S.C. was first privatized in 2008 when 22 percent of its shares were sold to a Yemeni company, Sheba Ethiopia Investment Plc, for $35 million.

Sheba’s bid to beef up its share by 20 percent was however disqualified after its representatives arrived late for the bid opening meeting in May, Addis Fortune reported.

With JT’s purchase Sheba’s stake in the Ethiopian company is now valued at $255 million, seven times the amount they paid in 2008.

In 2012, Ethiopia offered to sell over 40 public enterprises, including several large farms, a winery and a big hotel, over the next three years, Reuters reported.

While it managed to sell some firms, several other still remain unsold due to lack of interest from foreign investors.

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