PMI acquisition will up Algerian earnings

Philip Morris International said yesterday it had entered into a definitive agreement to acquire 49 percent of the shares of United Arab Emirates-based Arab Investors-TA (AITA) for $625 million.

Through this acquisition, PMI will secure an almost 25 percent economic interest in the Société des Tabacs Algéro-Emiratie (STAEM), a joint venture that is 51 percent owned by AITA and 49 percent owned by the Algerian state-owned Société Nationale des Tabacs et Allumettes SpA, the market leader.

“STAEM, with which PMI has had a successful partnership since 2005, manufactures and distributes under license PMI’s Marlboro and L&M brands, which together hold a significant share of the international trademarks sold in Algeria, placing PMI’s brand portfolio as the second largest in the market,” PMI said in a note posted on its website. ‘This equity investment in AITA will provide PMI with enhanced earnings from Algeria and is projected to be accretive to PMI’s earnings per share as of 2014.”

Commenting on the deal, Miroslaw Zielinski, PMI’s president, Eastern Europe, Middle East & Africa region and PMI Duty Free, said that Algeria, with the fourth-largest GDP in Africa and an estimated cigarette market of 30 billion units, held tremendous potential for future growth.

“This agreement confirms our confidence in the Algerian economy, the cigarette industry and their long-term prospects. Over the last five years, Algeria has been a key driver of the growth of our premium brands in North Africa, and the investment we are announcing today will significantly enhance our prospects in the country.

“Our new partnership with the UAE-based investors, from whom we are acquiring the 49 percent interest in AITA, also opens additional business opportunities in Egypt and certain other North African and Middle Eastern markets where there is potential for further expansion.”