Britain's Imperial Tobacco Group, which manufactures Superkings and Regal cigarettes, yesterday launched a bold GBP652 million (about HK$8.39 billion) bid to become a leader in the lucrative European hand-rolled tobacco market.
In a deal struck with Sara Lee Corp, the giant US food, household and body care group, Imperial plans to buy the Dutch-based tobacco business of Douwe Egberts Van Nelle, propelling it to the No 1 position in the vital Dutch market - the largest hand-rolled tobacco market in the world - where Douwe Egberts holds a 60 per cent share.
Sara Lee said it intended to exit the tobacco business, where it is now left with Douwe Egberts' US operations, which account for just 3 per cent of Douwe Egberts' overall business.
The combined group would create one of the world's largest pipe tobacco companies, and one of the leading hand-rolled tobacco manufacturers, with handrolled sales of more than 19,000 tonnes and pipe tobacco sales of almost 1,000 tonnes.
Douwe Egberts - owner of well-known brand names Drum, Van Nelle and Amphora, is a global leader in hand-rolled tobacco, with an estimated world market share of about 27 per cent. Its Drum and Van Nelle brands sell in Hong Kong, the mainland, Japan and Indonesia.
Last year, the firm's operating profits to June 28 before exceptionals reached GBP65 million on pre-tax turnover of GBP177 million. Imperial said Douwe Egberts' profit for the six months to December 27 was GBP32 million, on pre-tax turnover of GBP89 million.
'The acquisition of [Douwe Egberts] represents a major step in our strategy to become a truly integrated international tobacco business,' Imperial chief executive Garteh Davis said.
