INDONESIA
Japan Tobacco Inc. (JTI) announced in early August that the JT Group has signed an agreement to purchase 100% of the outstanding shares of PT. Karyadibya Mahardhika (KDM), a kretek cigarette company, and its distributor, PT. Surya Mustika Nusantara (SMN), for US$677 million.
The transaction is expected to be completed in the fourth quarter of fiscal year 2017 following regulatory clearance. This deal will give JTI an immediate nationwide scale and presence in the Indonesian kretek market.
“We are excited to enter the Indonesian kretek market nationwide by leveraging KDM’s supply chain, including procurement and production, as well as SMN’s broad-scale distribution network,” said Mutsuo Iwai, executive v.p. and president of the tobacco business. “This will be an important expansion of our geographic footprint in emerging markets for our future sustainable growth. Notably, this is our first significant acquisition in Southeast Asia and an excellent opportunity for us to further develop our business in a thriving region.”
KDM operates through nine production facilities of kretek cigarettes in Java and sells its products across Indonesia through SMN. The two entities employ around 7,500 people.
“I am confident that KDM’s excellent kretek products and local expertise and SMN’s strong distribution platform, together with JTI’s international know-how, will further strengthen our growth in Indonesia,” said Eddy Pirard, JTI’s president and c.e.o. “We look forward to welcoming all employees into our organization.”