British American Tobacco (BAT) is set to extend its reach into the Balkans after the cigarette giant agreed to purchase TDR from Croatia’s Adris Grupa yesterday for €550m (£394m).
BAT, which last year had a global market share of 12 per cent in tobacco products, said it will benefit from TDR’s strong brand presence in Croatia, Bosnia and Serbia.
Furthermore, it said the acquisition will give the firm well established links with retailers and distributors in the region, as well as enhanced regional leaf processing capabilities.
As part of the transaction, BAT has pledged to keep TDR’s manufacturing facility in Kanfanar, Croatia, open for the next five years in order to ensure the preservation of its highly skilled workforce.
Commenting on the acquisition, BAT chief executive Nicandro Durante said: “This is an exciting acquisition for BAT, which will provide immediate scale in three core markets of Croatia, Bosnia and Serbia and establishes a sustainable platform to grow our business in central Europe”
Adris, which also operates in the tourism and insurance industries, reported a nine per cent fall in sales of tobacco products during the last financial year on a like-for-like basis.
The firm announced its decision to seek a partner for its cigarette division last September, saying increasing competition was weighing on the business.
In March BAT also cited tough trading conditions for a 5.8 per cent fall in revenues during the first quarter as cigarette volumes slipped.
Shares in BAT closed down by 0.36 per cent to 3,592.5p yesterday.