British American Tobacco agrees to acquire Protabaco

British American Tobacco has agreed to acquire a 100 per cent interest in privately owned Productora Tabacalera de Colombia, S.A.S. (Protabaco), the second largest cigarette company in Colombia, for an enterprise value of US$452 million.

On completion, the acquisition will elevate British American Tobacco from third to second place in Colombia, Latin America’s fourth largest cigarette market with total industry sales of around 17 billion cigarettes in 2010.

Mark Cobben, British American Tobacco’s Director, Americas, said: “This investment will strengthen and complement our position in an important market and fill a strategic gap in our Americas region.”

Protabaco sold 5.5 billion cigarettes in 2010 – accounting for almost one third of the domestic market. Its biggest brand, Mustang, is the country’s second best selling cigarette with a retail share around 18 per cent.

Funding for the transaction will be from existing British American Tobacco resources.

The transaction represents a multiple of 11.3 times Protabaco’s US$40 million domestic 2010 EBITDA on net domestic revenues of US$110 million.

The transaction is subject to competition authority approval and final confirmatory due diligence.