Japanese 'to buy British tobacco giant'

Japan Tobacco has agreed to acquire Britain’s Gallaher Group for nearly £10bn (€14.9bn), the largest corporate acquisition by a Japanese company, it is reported today.

Japan Tobacco has agreed to acquire Britain’s Gallaher Group for nearly £10bn (€14.9bn), the largest corporate acquisition by a Japanese company, it is reported today.

JT, the world’s third-largest tobacco company, and Gallaher, which owns the Benson & Hedges and Silk Cut brands, are expected to announce the 2.2 trillion yen deal as early as today, according to a report by Nihon Keizai Shimbun, Japan’s largest business daily.

Kyodo News agency carried a similar report. Both quoted unnamed JT officials.

JT spokeswoman Yukiko Seto refused to say whether an agreement had been reached, but said the company would hold a press conference “when appropriate” but would not to give a date or time.

The company released a statement yesterday confirming it was in talks to takeover the Gallaher Group, and said it would swiftly announce any agreement.

The takeover tops Softbank’s takeover of Vodafone Group’s Japanese mobile phone operations for £8.2bn (€12.2bn) as the largest by a Japanese company, the Nihon Keizai said.

A possible takeover of Gallaher would boost JT’s share of the European tobacco market to 23% from 10%, according to the paper. JT’s world share would jump 3.1% to about 11%, it said.

The bid also highlights bolder strategies Japanese companies are taking as they seek ways to grow. Earlier this year, Nippon Sheet Glass bought Pilkington, a British rival that was twice its size, in a £2bn (€3bn) deal.

Shares in Gallaher, the world’s fifth largest tobacco company, rose 4p to £11.55 in London yesterday after the company said it was in discussions about a possible takeover offer.

The London-based company said the announcement was made without the approval of the potential bidder, which reports identified as Japan Tobacco, and that “there can be no certainty that an offer will be made nor as to the terms on which any offer might be made”.

The Wall Street Journal reported that JT had offered £11.40 a share for a deal worth nearly £7.5bn (€11.2bn), below the figures reported by Nihon Keizai and Kyodo.

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