[Intl-tobacco] Tobacco privatization in Turkey - clips

[Robert Weissman]

Top tobacco firms line up for Turkey's Tekel - Reuters
September 1, 2003

Siobhan Kennedy

London - Top tobacco companies such as BAT and Altria are meeting with mana=
gement
of Turkish state cigarettes-to-salt conglomerate Tekel as the deadline
looms for a
forthcoming privatisation. Ankara has set a cut-off date of September 26 fo=
r
expressions of interest in Tekel's cigarette business, which sources
involved in
the deal said was expected to fetch between $2 billion and $3 billion.

BAT and Philip Morris's Altria, maker of Marlboro cigarettes, have both sho=
wn
preliminary interest, alongside Japan Tobacco 2914.T , Imperial Tobacco, Al=
tadis
and the Korea Tobacco and Ginseng Company, the sources said. The
cigarette makers
have sifted through Tekel's financial books and heard management
presentations, the
sources added."They're doing due diligence, they've had site visits, and th=
ey're
having management presentations this week," one source familiar with the
sale said.

The Turkish government has said it plans to sell its Tekel alcohol and toba=
cco
monopoly as part of a series of privatisations that it hopes will raise
$4 billion
in total and satisfy pledges made to the IMF in return for billions of
dollars in
lending. Other assets up for sale include a stake in oil refiner Tupras,
petrochemical producer Petkim and sugar producer Turk Seker.

Tekel's tobacco arm is expected to raise the most cash, the sources
said, given
Turkey's ranking as the world's sixth-largest cigarette market. Tekel produ=
ces
about 115 billion cigarettes a year. Bankers also believe the tobacco busin=
ess
could fetch a high price, given the success of recent cigarette
privatisations in
Morocco, Serbia and Italy, which were all concluded at prices well above in=
itial
expectations.

Revised bids will be scheduled for November, the sources said. A
shortlist will
then be drawn up and a winner selected or the finalists will be put
through a
further round of open auctions, the sources added. Although the preliminary
interest has been healthy, one of the main issues that potential bidders
will need
to consider will be the state of Tekel's production infrastructure,
which is in
dire need of modernisation and rationalisation.

"You'd get to buy a big market share all in one go, but there's a lot
more work
needed before we could stick a price on it," said a source close to one
of the
possible bidders. "Another issue is whether it's really worth all of the ma=
nagement
time to stay in the process," the source added.

All the cigarette makers, except Japan Tobacco, declined to comment,
except to say
they were continuing evaluating their options in Turkey. Japan Tobacco,
which is
the world's third-largest tobacco group and which owns such brands as Camel=
,
Winston, Salem and Mild Seven, said it had not yet decided whether to parti=
cipate
in a final bid. "But we want to positively consider it," Japan Tobacco Pres=
ident
Katsuhiko Honda said recently.

BAT may bid more than 2 billion pounds for Tekel - Turkish Daily News
August 19, 2003

Ankara - British American Tobacco could bid more than 2 billion pounds
for Turkey's
Turkey's state-owned cigarette manufacturer Tekel, the British Independent
newspaper reported yesterday. BAT will put in a bid next month for
Tekelin the
first round of the auction of the business the Independent quoted a company
spokesman as saying. Some bankers have valued Tekel as high as 3.6
billion euros.

Independent said Turkey is the seventh-biggest tobacco market in the
world, by
volume, and Tekel has some three-fifths of it, with brands including
Samsun and
Yeni Harman. The Turkish government plans to sell Tekel's tobacco arm, whic=
h
produces a large proportion of Turkey's cigarette products, and its alcohol
subsidiary, maker of the Turkish Raki aniseed drink, separately to
attract interest
from investors. The deadline for final bids for Tekel is September 26.

The BAT spokesman said: "We're interested [in Tekel]. We've joined the proc=
ess,
though we are not committed to be in the final round [of the auction]." The
newspaper reported that BAT's bid would cause concern among the company's
shareholders who think BAT has been spending more than it should on acquisi=
tions.
Independent said entering the bid contest would allow BAT to view
Tekel's books in
detail to see whether the deal "works" for the company. The sale
process, being
handled by Citigroup, should be completed by the end of the year.

BAT's main rivals are likely to be America's Philip Morris and Altadis, the
French-Spanish venture. Others said to be in the running include Japan
Tobacco and
the Korean Tobacco and Ginseng Company, according to the report. Tekel
is one of
the last big cigarette makers that have not been bought by a
multinational group.
Recent deals in the sector have been struck at much higher prices than orig=
inally
expected.

http://www.turkishdailynews.com/[...]N/latest/econ.htm#e2

Bids for Tekel could reach $4bn
Metin Munir
Financial Times
15 August 2003

Six of the world's largest tobacco companies are preparing to bid for
the cigarette
arm of the Turkish state group Tekel, in a contest that could fetch up
to $4bn,
according to bankers.

British American Tobacco, Japan Tobacco, Imperial Tobacco, Philip
Morris, Altadis,
the French Spanish venture, and the Korean Tobacco and Ginseng Company
are expected
to make offers on September 26, the deadline for submitting bids.

Tekel is one of the last major cigarette manufacturers not acquired by
multinationals. Earlier this month, the Serbian government sold
controlling stakes
in two tobacco factories for =80600m ($674m) to Philip Morris and BAT. In
July, BAT
agreed to pay =802.32bn for Ente Tabacchi Italiani, the Italian
state-owned cigarette
company.

There is no price tag on Tekel's cigarette business, which accounted for
77 per
cent of the company's revenues of $2.8bn in 2002. Most of the rest of
its Tekel's
revenues came from alcohol, also being privatised.

Metin Ar, director of the Istanbul-based Garanti securities, estimated Teke=
l's
cigarette operations could be sold for up to $2.5bn. However, one banker
representing a multinational bidder reckoned the company could fetch as
much as
$4bn because Turkey was one of the largest and fastest growing cigarette ma=
rkets.

The recent Serbian and Italian deals, as well as the =801.29bn sale in
June of Regie
des Tabacs Marocains by the Moroccan government to Altadis, fetched
prices ranging
from double to quadruple original estimates.

But both Altadis and BAT were seen to have overpaid, which may make them ca=
utious
bidders. BAT confirmed it was participating in the preliminary process.

Tekel made a net profit of $181m in 2001 and has a 61 per cent mark et
share. It
competes against Philip Morris, with 27 per cent, and Japan Tobacco,
with 12 per
cent, according to Garanti.



August 14, 2003
Six bidders seen for Turkey's Tekel - paper.
Reuters

 LONDON, Aug 15 (Reuters) - British American Tobacco (BATS.L) and Philip Mo=
rris
(MO.N) are likely to be among the world's six top tobacco firms
preparing to bid
for the cigarette arm of Turkey's Tekel, the Financial Times reported on Fr=
iday.

The newspaper named Japan Tobacco (2914.T), Imperial Tobacco (IMT.L), Altad=
is
(ALT.MC) and the Korean Tobacco and Ginseng Company as the other groups
expected to
make offers for the state-owned business by Sept. 26, the deadline for bids=
.

The paper quoted bankers as saying that the bidding for the business,
which has a
61 percent market share in Turkey, could fetch up to $4 billion given
that the
country was a large and fast growing cigarette market.

The Turkish government plans to sell Tekel's tobacco arm and its alcohol
subsidiary, which makes the Turkish Raki aniseed drink, separately to attra=
ct
interest from investors.

Japan Tobacco, which is the third-biggest tobacco company in Turkey and
operates a
plant in the country, said last month it may join the bidding for
Tekel's tobacco
business.
The newspaper said BAT had confirmed that it was participating in the preli=
minary
process.

BAT and the others were not immediately available for comment.