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Japan Tobacco to buy JT International

 | April 1, 2014

Japan-Tobacco-logoBy Sathish Govind

KUALA LUMPUR: JT International Bhd, which makes Camel and Salem cigarettes, has received a takeover offer of RM808.4 million from its controlling shareholder Japan Tobacco International Holding BV or RM7.80 a share for the remaining shares.

Japan Tobacco will buy the remaining 39.63% or 103.549 million shares. The offer price is at a 20% premium to its last traded price of RM6.50 per share and well above the net asset value of RM1.37 per share as of Dec 31, 2013.

The stock was suspended last Friday with 193,000 shares traded, pending the takeover offer announcement.

Japan Tobacco did not provide the rationale behind the conditional takeover offer. In a Bursa Malaysia filing yesterday, JT International said the offerer does not intend to address a shortfall in the share spread as required by listing requirements as a result to the offer.

The Japanese company intends to delist the counter.

TA Securities Holdings Bhd analyst Mandy Teh said considering the challenges facing the industry particularly revolving around illegal cigarettes in the market, it would be best for minorities to accept the offer.

She said the eventual delisting of JT International from Bursa Malaysia will be easier for Japan Tobacco to manage the business as considerable economies of scale would accrue to the parent company.

Teh said the offer was extremely attractive and advised minority shareholders to accept the offer. TA Securities’ fair valuation of the shares was about RM6.

“Although the shares had closed at RM6.50 last Friday, the offer of RM7.80 was beyond the expectation of what shareholders can anticipate considering the shares were hovering around the RM6 region,“ she said.

Japan Tobacco International (JTI) is the international tobacco division of Japan Tobacco Inc, the world’s third largest manufacturer of tobacco products, with a global market share of 10.5%.

Over a 10-year period and among the international tobacco companies, JTI is the fastest growing.

This content is provided by FMT content provider The Malaysian Reserve


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