The JT Group is buying a 40 percent stake in the National Tobacco Enterprise of Ethiopia (NTE).
Japan Tobacco Inc. said on Friday that, following its successful bid in May, the JT Group had signed with the Ethiopian government a share purchase agreement worth US$510 million for 40 percent of the total shares in NTE.
“The JT Group is delighted to be entering the market where we currently have no presence,” said Mutsuo Iwai, executive vice president and president of the group’s tobacco business, in a statement posted on JT’s website. “Ethiopia will be an important expansion of our geographic footprint in emerging markets. As the largest shareholder, we expect to be able to exert significant influence over the direction of the company. The country is currently experiencing double-digit economic growth, with industry volume also expected to continue to increase.”
Demitu Hambisa, Ethiopia’s Minister of Public Enterprises, said JTI was recognized as a leading tobacco company and that he expected it to bring its technical, business and management ability to develop NTE into a world class company that would contribute to the overall Ethiopian economy. “We very much look forward to working with JTI and offer our full support in making this a success for all stakeholders,” Hambisa said.
Meanwhile, Jorge da Motta, Japan Tobacco International’s regional president for the Middle East, Near East and Africa, said the Ethiopian government fully recognized JTI’s expertise as a global manufacturer, and was ready to give the company the opportunity to leverage its successful experience in other Middle East and African markets such as Tanzania and Egypt. “We are therefore confident that we will achieve all the goals we have set for this business,” he said. “We will work with all shareholders to see how we can continue to grow the NTE business and explore opportunities to further strengthen NTE’s brands such as Nyala, as well as the overall distribution and manufacturing capabilities.”
The transaction was said to have been completed with funds from the group’s existing cash and loan facilities. The financial impact on the group’s consolidated performance for the fiscal year 2016 are said to be non-material.
According to a Geeska Afrika story last month, five bidders made offers to buy the 40 percent stake in NTE, which is the only company allowed to manufacture or sell tobacco products in Ethiopia.
JTI’s offer was said to have been more than double the next highest bid of US$230 million made by British American Tobacco.