[Intl-tobacco] Turkey disappointed in Tekel tobacco offer

[Robert Weissman]

Turkey disappointed in Tekel tobacco offer
Reuters - Update 2
 November 5, 2003

 By Hatice Aydogdu

 Ankara - Turkish officials on Wednesday said Japan Tobacco placed the
highest bid at $1.15 billion for the tobacco arm of Tekel, below market
expectations for the flagship sale in Turkey's ambitious privatisation
plans. Privatisation Administration chief Metin Kilci acknowledged the
offers for the cigarette maker were a disappointment.

 "Our expectations were much higher," Kilci told reporters after
announcing the results of the tender. "If I were in the place of (the
state tender) commission, I would decide to cancel the Tekel's tobacco
arm tender." Analysts had said Tekel, with a 58 percent share of
Turkey's cigarette market, could fetch up to $3 billion as the
government chases revenues under tight budgetary constraints agreed with
the International Monetary Fund under a $16 billion pact.

 Kilci said the commission would decide in one to two days.

 Turkey has promised the IMF it will launch privatisations this year
that will eventually be worth $4 billion. British American Tobacco also
participated in the tender for Tekel's tobacco division, officials said.
Tekel owns six tobacco factories in Turkey, the world's sixth-largest
cigarette market.

 Separately, Turkish company Tutsab made the highest bid of $292 million
for Tekel's alcohol division, officials said. Large conglomerate Sabanci
group and Tahincioglu had also submitted bids for the alcohol arm of
Tekel. Kilci meanwhile sought to reassure nervous investors about the
sell-off of state oil refiner Tupras, one of the Istanbul Stock
Exchange's largest firms and the dominant player in Turkey's refining
sector.

 "The Tupras tender process is continuing. Enough bids have been taken,"
Kilci said. Markets have been anxiously awaiting news on the Tupras
block sale, and its shares fell 3.15 percent to 12,300 lira.