Japan Tobacco says it will buy the Natural American Spirit brand outside the US for roughly $US5.0 billion ($A7.16 billion) from Reynolds American.
The transaction is expected to be completed by early 2016, JT said in its statement on Tuesday.
The brand has seen “strong growth momentum in the US, Japan, Germany, Switzerland, Italy, Spain, the UK and others”, the Japanese firm said in a statement.
Japan accounts for the majority of the brand’s sales volume outside the US, JT added.
“This investment will underpin (Japan Tobacco group’s) sustainable long-term profit growth in this highly competitive market,” the JT statement said.
Japan Tobacco is one of the world’s biggest tobacco companies whose international brands include Winston and Camel.
But it has suffered lacklustre domestic sales, as Japan’s once huge number of smokers shrinks.
Japan Tobacco has looked at international markets for growth potential, and made international headlines for the 2007 purchase of Britain’s Gallaher for almost $US19 billion.
“Natural American Spirit, which has a strong and international presence in a premium priced category, will allow the JT Group to further extend its brand portfolio,” said Mitsuomi Koizumi, president and chief executive officer of the JT Group.
Santa Fe Natural Tobacco Company launched the Natural American Spirit brand in 1982 and has marketed its products as without additives “with a marketing theme that is environmentally conscious and socially progressive”, Japan Tobacco said.
In a separate statement, Susan M. Cameron, chief executive of Reynolds American Inc, said the brand’s international potential will be fully realised under Japan Tobacco.
“We believe this sale once again demonstrates our commitment to creating value for our shareholders, and we believe the addition of Natural American Spirit to the JT Group’s brand portfolio will benefit their investors as well,” she said.
The deal would allow the US firm to focus on growing the brand at home, the American firm added.
AFP
