[Intl-tobacco] British American Tobacco Invests N1.6 billion In Nigeria

[Robert Weissman]

>British American Tobacco Invests N1.6 billion In Nigeria
>
>By Sulaiman Abubakar
>
>LAGOS, October 10 (NENO) - After nearly 40 years of existence as a
quoted
>company, the Nigerian Tobacco Company (NTC) will next month be
swallowed up
>by British tobacco giant, British American Tobacco (BAT), which is
putting
>up a N1.6 billion cigarette manufacturing factory in Lagos, industry
>sources told NENO.
>
>Public notice of the BAT move came up in newspaper advertisements last
week
>and outlined the rites of passage into oblivion of NTC and the process
of
>emergence of BAT which owns nearly 60% of the Nigerian company.
>
>First, BAT would acquire the 40% shares of NTC, which are held by local

>Nigerian investors, making the shareholders, in the words of industry
>sources, "an offer they cannot refuse". This is thought to be at least
two
>and half times the current nominal value of 50 kobo per share.
>
>The merger proposal will be formally tabled before an extraordinary
general
>meeting of the shareholders of NTC on October 27. Approval, according
to
>industry sources, is as good as given since NTC has been performing
rather
>poorly in the market in recent years.
>
>Investors who have received no returns from cigarette sales in the last
5
>years would, in BAT's calculations, jump at the opportunity to go home
with
>far more than the current market value of their shares.
>
>All the existing staffers of NTC are also being offered "very generous"

>severance benefits though it is thought that a good number would be
>retained by the new company.
>
>NTC has seen its turnover decline from 2.286 billion naira in 1996 to
only
>1.602 billion naira in 1996. A pretax profit of 143.68 million naira in

>1999 contrasts with the 280.4 million naira earned in 1996.
>
>The company has been a victim of a sophisticated, highly connected
>syndicate of local and international smugglers which swamp the market
with
>cheap foreign imports, ironically including BAT manufactured
cigarettes.
>Paying no excise or other taxes, said one former senior employee of
NTC,
>such imports largely smothered the market for local cigarette
manufacture.
>Smuggled imports account for 9 billion of the 11 billion sticks of
>cigarette smoked in Nigeria annually.
>
>Over the last two decades, NTC has had to progressively cut back its
>operations closing its Ibadan factory and concentrating on cigarette
>manufacturing at its factory in Zaria, northern Nigeria. It is not yet
>known what would be the fate of the Zaria factory when BAT starts
>manufacturing in Lagos.
>
>NENO
>
>_______________________________________________________________________

>
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