Japan Tobacco Inc. (JAPAF.PK) said Thursday that it has agreed to buy Gryson NV, a family-owned Belgian tobacco company, for 475 million euros or $595 million. The deal is part of the Japanese company's efforts to expand its presence in Europe amid a shrinking market at home.
Japan Tobacco, the world's third-largest tobacco company by sales volume after Philip Morris International Inc. (PM) and British American Tobacco plc (BTI), entered into a deal to acquire all the outstanding shares in Gryson from its parent company GT&Co. BVBA. The company expects to complete the acquisition within the current year, following regulatory approvals.
Japan Tobacco noted that the transaction is valued at 12.3 times Gryson's underlying earnings before interest, tax, depreciation and amortization of 38.7 million euros projected for 2012. The company expects to fund the deal through a combination of its existing funds and loan facilities.
Japan Tobacco anticipates the acquisition to have a minor impact on its consolidated earnings for the fiscal year ending March 2013.
Gryson has established a presence in roll-your-own and make-your-own tobacco markets across several countries such as France, Belgium, Luxembourg, Spain and Portugal.
In 2011, the company held a 20.8 percent share in the rolling tobacco market in France, a 5.9 percent share in Belgium, a 9.6 percent share in Spain and a 22.9 percent share in Portugal.
Gryson's key brands include Fleur du Pays, Orlando and Domingo. Fleur du Pays, a heritage French brand, leads the RYO/MYO market in France with an 11 percent share on sales of about 900 tons in 2011.
Gryson has factory and office facilities in Wervik, Belgium, and independent sales teams in France, Spain and Belgium. The company's sales volumes in 2011 were about 3,900 tons, which is equivalent to 5.2 billion units of cigarette.
Commenting on the deal, Eddy Pirard, Regional President, Western Europe for JTI said, "Our investment in Gryson presents Japan Tobacco International with an attractive opportunity to enhance its position in the growing and profitable RYO/MYO market in Europe, anchored on this well-managed, innovative and successful company."
JAPAF.PK closed Thursday's trading at $5,250.00, down $251.00 or 4.56 percent from Wednesday's close.
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