Philip Morris International to Spend $625 Million to Acquire 25% Interest in Algeria Joint Venture
For $625 million, Philip Morris Internationalannounced today, it plans to acquire a 49% stake in United Arab Emirates-based Arab Investors-TA (FZC), which will give it a bigger stake in the Algerian market.
Arab Investors-TA (FZC), also known as AITA, holds a 51% share in a joint venture, Société des Tabacs Algéro-Emiratie (STAEM), with Algerian Société Nationale des Tabacs et Allumettes, which is stated-owned.
Through the acquisition, Philip Morris will own 25% of the STAEM joint venture in Algeria, with which it has had a partnership with since 2005. STAEM manufacturers and distributes Philip Morris' Marlboro and L&M brands, and Philip Morris says it has the second-largest brand portfolio in the market.
The Philip Morris press release noted that the investment will give a boost to Philip Morris' earning potential in Algeria, and noted this will be reflected in earnings per share results beginning in 2014. "With the fourth largest total GDP in Africa, and an estimated cigarette market of 30 billion units, Algeria holds tremendous potential for future growth," Miroslaw Zielinski, Philip Morris president of Eastern Europe, Middle East & Africa, was quoted as saying.
In addition, he said "Algeria has been a key driver of the growth of our premium brands in North Africa and the investment we are announcing today will significantly enhance our prospects in the country."
The press release also mentions the potential for the partnership with United Arab Emirates investors to likely allow for additional opportunities in Egypt and other North Africa and Middle Eastern countries where Philip Morris has the potential for future growth and expansion.
In May of this year, Philip Morris also acquired the final 20% interest in its Mexican subsidiary for $700 million and that transaction is anticipated to be completed today.
The article Philip Morris International to Spend $625 Million to Acquire 25% Interest in Algeria Joint Venture originally appeared on Fool.com.
Fool contributor Patrick Morris has no position in any stocks mentioned. The Motley Fool owns shares of Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.