British American Tobacco to buy Croatia’s TDR for $602 mn

British American Tobacco Plc (BAT) today struck a deal to buy Croatia's biggest tobacco company TDR from Adris Grupa for €550 million ($602 million), including debt.

BAT, one of the world's five largest tobacco companies, is also in the midst of acquiring the stake it does not already hold in Brazilian rival Souza Cruz SA.

TDR is the leading independent cigarette manufacturer in Central Europe with a market leading position in Croatia and substantial market share in Bosnia and Serbia, which will give BAT the foothold and grow its business in the region.

By combining its existing business in the region together with TDR, BAT expects to benefit from highly skilled people, well established brands, enhanced regional leaf processing capabilities, a local high quality factory and print facility and strong relationships with distributors and retailers in these markets.

As part of the transaction BAT has committed to keeping TDR's manufacturing facility in Kanfanar, Croatia operational for at least five years following completion of the acquisition. 

The transaction represents a multiple of approximately 12.5 times based on TDR's financial year ending 31 December 2014 EBITDA of approximately €44 million.

Nicandro Durante, BAT's CEO, 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''.

The proposed acquisition, which is subject to anti-trust approvals and Adris shareholder consent, is expected to complete in October 2015.

London-based BAT is the world's second-largest quoted tobacco group by global market share, with brands sold in more than 200 markets.

Its over 200 global brands include Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans.