JT’s Nakhla acquisition is platform for JTI entry to Egypt’s cigarette market
Japan Tobacco Inc. said today that it had entered into an agreement to acquire all of the outstanding shares of Al Nakhla Tobacco Company S.A.E. and Al Nakhla Tobacco Company – Free Zone S.A.E. (collectively, Nakhla).
‘The agreement has been signed1 between the JT Group and BATATAS.A., which controls Nakhla,’ JT said in a note posted on its website.
‘JT expects to complete the acquisition in the fiscal year ending March 31, 2013.
‘Nakhla, with headquarters and two factories inCairoandShebin El Kom,Egypt, is one of the world’s leading waterpipe tobacco (also known as molasses and shisha) manufacturers with an important presence in its home market.
‘It exports to 85 countries, primarily in the Middle East andNorth Africawhere such products have a deep rooted heritage.
‘With a heritage of almost 100 years of industry experience, Nakhla pioneered the concept of aromatic molasses and holds a 70 per cent market share in this segment inEgypt.
‘Nakhla’s total sales volume was approximately 24,000 tons in 2011 (roughly comparable to 24 billion cigarettes by volume), across a diverse brand portfolio comprising El Nakhla, Classic, Mizo and other popular trademarks.’
“Our acquisition of Nakhla offers an excellent opportunity for growth in the waterpipe segment and widens our brand portfolio, in line with our strategy to address the needs of adult consumers across a range of tobacco product categories” commented Fadoul Pekhazis, Japan Tobacco International’s regional president of its Middle East, Near East, Africa and Turkey regions, and its World-wide Duty Free operations.
“Furthermore, the acquisition enhances JTI’s geographical footprint in the Middle East and Africa, and over the long-term provides a platform for JTI to participate in the sizeable cigarette market inEgypt.”
JT said it was envisaged that the acquisition would be funded by JT Group’s existing funds and, if necessary, by loan facilities.
‘The transaction is valued at a high single digit multiple of Nakhla’s underlying earnings before interest, tax, depreciation and amortization in 2011,’ JT said.
‘The acquisition is expected to have a minor effect on the Group’s consolidated performance, cash flow and balance sheet.’
