BAT finalises its acquisition of Protabaco

Steve Dinneen
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British American Tobacco (BAT) has completed its $452m (£270m) swoop for Colombia’s Protabaco.

The newly acquired firm is the second largest cigarette company in Colombia, selling 5.5bn domestic cigarettes in 2010.

Its biggest brand, Mustang, is the country’s second best selling cigarette with a market share of around 18 per cent. BAT itself sold 708bn cigarettes in 2010.

BAT said funding for the cash acquisition will be from the group’s existing resources. The deal represents a multiple of 11.3 times Protabaco’s $40m domestic 2010 Ebitda on net domestic revenues of $110m.

BAT, which has 200 brands worldwide including Dunhill, Lucky Strike and Kent, was advised by investment bank Rothschild on the Protabaco deal.

The company has said one of its key aims is to make acquisitions to grow across the globe.

Last quarter BAT reported an increase in earnings after it raised its prices to counter what it branded a tough sales environment, with volumes down on the previous three months.




ADVISING British American Tobacco was Rothschild.

Roberto Paiva, vice chairman of Rothschild Latin America and a board member of Rothschild Mexico, led the deal team on BAT’s acquisition of Protabaco.

Cambridge-educated Paiva has 20 years experience, 10 of those with Rothschild and previously Lazards. He recently handled the €1.2bn acquisition by MAN of Volkswagen’s truck business in Brazil.

The deal for Protabaco saw negotiations starting in January, with a team of bankers in London backing up Chile-based Paiva. He dealt directly with the family owners of the Colombian firm, which had been an acquisition target for rival Philip Morris.

The negotiations were described as “smooth” and the price tag was the same as that offered by Philip Morris two years ago.

Paiva’s success in sealing the deal now gives BAT a strong footprint in the Colombian market.