BOSNIA
British American Tobacco (BAT) has signed a 100 million euro (US$106.2 million) agreement to acquire Bulgarian cigarette maker Bulgartabac’s entire range of tobacco brands in the country and its retail business operating under the brand Lafka.
However, Bulgartabac’s Banja Luka-based tobacco factory will remain the property of the Bulgarian company.
Ram Addanki, c.e.o. of BAT Adria said that Bosnia is an interesting market for BAT despite its very challenging business environment, which is mostly the result of high excise duties which lead to illicit sales.
“In Bosnia, the black market takes up more than 30% of the total consumption of tobacco, which annually costs the country more than 200 million marka (US$108.6 million),” he said.
The proposed acquisition, which will allow BAT to increase its market share to 40% in Bulgaria, up from 12% at present is subject to anti-trust approvals and is expected to be completed by mid-2017. In addition, BAT will acquire distribution and retail assets in Bulgaria and within the wider Adriatic region.
BAT recently purchased the tobacco business of another Bosnian company, Fabrika Duhana Sarajevo (FDS), including its retail business and tobacco brands, from Austria’s CID Adriatic Investments (CID).