[Intl-tobacco] PM/Altria grabs Greek cigarette Co.

[Robert Weissman]

TheDeal.com
Altria grabs Greek cigarette partner
by Nicola Hobday in London and Josh Karlen in New York
Posted 03:56 EST, 6, May 2003

Tobacco company Altria Group Inc., formerly known as Philip Morris, said Tu=
esday,
May 6, it will buy a 76% stake in Greece's Papastratos Cigarette Co. for
as much as
=DB371 million ($419 million) to boost the number of brands in its
portfolio. Altria
said it will make an offer for the remaining 24% in Papastratos within
30 days of
completing the acquisition, which it expects to occur in the second half
of 2003.
New York-based Altria, which took its new name in January, said it will
pay a
maximum of =DB18.50 per share for the Piraeus-based company, valuing the wh=
ole
company at =DB488 million.

Altria is making the acquisition through the Dutch affiliate of its Lausann=
e,
Switzerland-based Philip Morris International division. The price may be lo=
wered,
depending on due diligence results, the company said in a press release.

Philip Morris is acquiring Papastratos to boost the brands it can offer
in Greece,
where it has one-quarter of the market. Papastratos' local brands will comp=
lement
its own premium brands, Altria said. Papastratos has manufactured Philip Mo=
rris'
Marlboro brand since 1994 and distributes many of its other brands.

"Philip Morris International has a decades-long, successful relationship wi=
th
Papastratos in Greece and with this acquisition, we obtain attractive, grow=
ing
trademarks in the Assos, President and Papastratos brands," said Andre
Calantzopoulos, Philip Morris International's president and CEO, in a state=
ment.

The deal comes as Altria struggles with a sales slump and costly smokers'
litigation in the U.S. and with a slowdown in business in Western
Europe, while
volumes are staying higher in Greece and other foreign markets around
the globe.

Annual cigarette consumption in Greece in 2001 was 32.9 billion, up 11%
from 1997,
according to information provided by Papastratos. The country has a per-cap=
ita
consumption of 3,010 cigarettes per annum, the highest among European Union
countries.

Papastratos also has operations in Romania where its factory has an
annual capacity
of 3.5 billion cigarettes. The company exports its products to more than 30
countries.

The Greek company posted sales of =DB321.7 million in 2001, up 10.5% from
the year
earlier. It had a profit of =DB36.6 million before tax in 2001, 22% higher
than 2000.

The Greek company was founded in 1931 by four brothers: Epaminondas, Ioanni=
s,
Sotirios and Evangelos Papastratos. It has traded on the Athens Stock Excha=
nge
since 1941.

Papastratos, led by chairman and chief executive Christos K. Komninos,
has about
15% of the market with brands that include President and Assos. Philip
Morris has
25.5% of the Greek market and London-based British American Tobacco plc
has 15.4%,
putting Papastratos third, according to figures from 2001.

Philip Morris couldn't comment on any possible competition issues, though
regulators must still approve the deal.

A press spokesman for Papastratos would not name any of its advisers and
said he
couldn't comment on the transaction. Finance director Emmanuel Christeas ha=
ndled
the negotiations internally, according to the spokesman. Papastratos' inter=
nal
legal adviser is Kyriakos Ekonomou and its auditor is Deloitte & Touche. Ph=
ilip
Morris couldn't name any of its advisers.

Papastratos shares were suspended Tuesday following the acquisition announc=
ement,
but closed at =DB19.10 Monday in Athens, giving it a market cap of =DB510
million. The
company's shares have been climbing steadily this year, recently hitting
a 52-week
high of =DB19.20, although they have still slumped from trading at about
=DB51 in 1999.

The company has a price-to-equity ratio of 13.94 and recently reported
earnings per
share of =DB1.37. Altria's board of directors must approve the acquisition.