There’s a good chance Japan Tobacco International (JTI) will make a bid for Imperial Brands in 2017, according to a Bloomberg report quoting industry analysts.
JTI has become a distant third in the wake of British American Tobacco’s $49.4 billion takeover deal of Reynolds American Inc., which is set to create a giant rivaling Philip Morris International (PMI).
In addition to steep competition from PMI’s cigarette alternative, iQOS, JTI faces the introduction of plain packaging in the U.K. and record cigarette tax hikes in Russia, weighing on growth in two of its biggest overseas markets.
According to Bloomberg, JTI’s business plan for 2017 states a desire to expand geographically, “notably through acquisitions.”
Eamonn Ferry, an analyst at Exane BNP Paribas, put the probability of a JTI bid for Imperial at 70 percent.
With an acquisition of Imperial, JTI would catch up to PMI and BAT, as well as gain access to the lucrative U.S. tobacco industry.
Imperial has a 9 percent share of the U.S. market.