Cigarette maker Philip Morris International, Inc. (PM) said Friday that it has agreed to buy privately-owned Colombian cigarette manufacturer Productora Tabacalera de Colombia, Protabaco Ltda., for $452 million as part of its efforts to expand in Colombia. Protabaco is the second-largest tobacco company in Colombia.
The transaction is projected to be immediately marginally accretive to Philip Morris or PMI's earnings per share and is expected to close within the next six months.
Commenting on the deal, Miroslaw Zielinski, President of PMI's Latin America and Canada Region said, "We are extremely pleased to reach this agreement with Protabaco in order to continue to build our business in this important and strategic market. This strategically compelling transaction will provide PMI with an excellent opportunity to further develop Protabaco's strong brand portfolio and reflects the continuing confidence we have in the future of Colombia, its economy and the tobacco industry."
Protabaco was established in 1962 to manufacture the first acetate filter cigarette for the Colombian market. The company sold an estimated 6.1 billion cigarettes in 2008 and has an approximate market share of 31.8% in Colombia. The company reported net revenues of approximately $107.6 million in 2008. Its leading brands include Mustang, Premier and President.
New York-based PMI manufactures and sells cigarettes and other tobacco products outside of the U.S. The company, whose international brands include Marlboro, Merit, Parliament and Virginia Slims, held an estimated 15.6% share of the international cigarette market outside of the U.S.
Until its spin-off in March 2008, Philip Morris was an operating company of Altria Group Inc. (MO). The company is now looking to expand its business beyond cigarettes into smokeless tobacco products as industry volumes have fallen at an annual rate of 1%-2% for the past several years.
This is PMI's second acquisition in Colombia. In 2005, the company acquired Compañía Colombiana de Tabaco S.A., or Coltabaco, the largest cigarette manufacturer in that country for $300 million.
In early July, PMI said it agreed to acquire the South African operations of Swedish Match AB (SWMA, SWMAF.PK) for about $222 million. The South African operations of Swedish Match manufactures pipe tobacco and snuff category products, which represent an estimated 31% of total tobacco consumption in that country. The acquisition, which extends PMI's push into the smokeless tobacco products, is expected to close by the end of fourth quarter of 2009. PMI expects the acquisition to be immediately marginally accretive to its earnings per share.
PMI's peer British American Tobacco Plc (BTI,BATS.L) said in mid-June that it acquired an 85% stake in Indonesia-based cigarette maker PT Bentoel Internasional Investama Tbk from Rajawali Group and other shareholders for US$494 million, or GBP 303 million.
Indonesia is the world's fifth largest tobacco market by volume, with sales of around 250 billion cigarettes a year, and the kretek segment, or cigarettes made with a complex blend of tobacco, cloves and a flavoring 'sauce', accounts for some 93% of the market. Bentoel's key kretek brands include Star Mild, X Mild and Sejati. In 2008, Bentoel sold 17.7 billion cigarettes, representing about 7% of the market.
PMI is slated to report its financial results for the second quarter on July 23, 2009. Analysts expect the company to report earnings of $0.76 per share on revenues of $6.17 billion. In April, the company reported a 12% decline in profit for the first quarter to $1.67 billion, or $0.74 per share, as the impact of a stronger dollar overshadowed the favorable effects of price increases and acquisitions. Quarterly net revenues were $13.3 billion, down 7.4% from the $14.4 billion in the previous-year quarter.
In Friday's regular trading session, PMI is trading at $43.25, up $0.91 or 2.15% on a volume of 1.24 million shares. In the past 52 weeks, the stock has been trading in a range of $32.04-$56.26.
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December 19, 2025 15:10 ET U.S. inflation data and interest rate decisions by major central banks were the highlights of this busy week for economics news flow. Employment data and survey results on the housing markets also gained attention in the U.S. In Europe, the European Central Bank and Bank of England announced their policy decisions and macroeconomic projections.