JTI buys Serbia's Senta Tobacco

18/05/2006

Japan Tobacco International's purchase of Serbian cigarette manufacturer Senta Tobacco represents the first Japanese investment in Serbia. Company officials say it could be an incentive for others.

By Igor Jovanovic for Southeast European Times in Belgrade – 18/05/06

Serbian Finance Minister Mladjan Dinkic announced the JTI deal last week. [File]

Serbia has sold more than 98 per cent of the Senta Tobacco Industry to Japan Tobacco International (JTI) for 27.5m euros, Finance Minister Mladjan Dinkic announced last week. He said JTI is paying 253 euros per share -- six times more than book value. The sale is the first Japanese investment in Serbia.

"Serbia will earn around 14m euros from the sale of the tobacco plant, and 500 small shareholders will get 10m euros, which is very important for Senta, [in Vojvodina]," Dinkic said.

The Senta Tobacco Industry will become one of JTI's 17 production facilities. It has pledged not to move production from the town during a five-year period, and to employ 100 workers. Currently, there are 74 employees working at the factory.

JTI Vice President Mitsuomi Koizumi said Serbia plays an important role in the company's strategy for the Southeast European market. He said he expects the investment to serve as an incentive for other Japanese investors.

According to JTI Geneva Executive Director Thomas McCoy, the company will pump in around 100m euros. The plant will purchase tobacco grown on 1,300 hectares of land this year, and it expects a 2006 output of 2,000 tonnes of dried tobacco leaf.

The plant, which obtained a license for cigarette production last year, will first produce cigarettes for the Serbian market, and then will later branch into exports, McCoy said.

JTI is not the first international company to invest in the Serbian tobacco industry. In 2003, Philip Morris bought a factory in the town of Nis for 518m euros. In the same period, British American Tobacco bought Vranje Tobacco Industry for 87m euros.

In terms of cigarette sales, JTI is the third largest tobacco company in the world. It produces many international cigarette brands, including Camel, Winston, Mild Seven and Salem. Last year, JTI had net sales of 29.4 billion euros. Headquartered in Geneva, JTI has offices in more than 40 countries outside of Japan, with nearly 12,000 employees, and sales activity in more than 120 countries.