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     tobacco

This page provides some tobacco industry benchmarks.

It is of interest in illustrating -

• concentration, with major enterprises acquiring competitors to achieve economies of scale
• diversification into related sectors (eg paper and packaging) and into a wide range of other industries, including alcohol (beverage production and distribution), insurance, baking and other foods
• demerger, as tobacco-centred conglomerates spun off finance and food industry operations during the past decade

     recent landmarks

Recent cigarette M&A landmarks include -

• Altria Group agrees to buy snuff maker UST for US$10.3bn in 2008
• Altria Group agrees to pay US$2.9bn for cigar maker John Middleton from held Bradford Holdings in 2007
• Altria spins off majority stake in Kraft Foods in 2007
• Philip Morris International pays US$427m for Industria de Tabaco León Jimenes SA in 2007
• Philip Morris International buys 98% stake in Sampoerna for US$4.8bn in 2007
• mperial Tobacco buys Commonwealth Brands (US) for US$1.9bn in 2007
• Japan Tobacco pays US$15bn for Gallaher Group (UK) in 2007
• Philip Morris (US) buys 50% stake in Lakson Tobacco (Pakistan) for US$340m in 2007
• Imperial Tobacco buys Reemtsma for €5.8bn in 2003
• Philip Morris merges Miller Brewing with South African Breweries in US$5.6bn deal in 2002

     diversification

• Philip Morris acquires Nabisco Holdings for US$14.9bn in 2000
• BAT acquires Rothmans International for £13bn in 1999
• Tabacalera (Spain) and Seita (France) merge as Altadis with market capitalisation of US$7.18bn in 1999
• BAT sells insurance operations - British American Financial Services (BAFS) - to Zurich Insurance in 1998
• BAT acquires Ente Tabacchi Italiani (ETI) S.p.A in 1993
• Kraft General Foods buys Jacobs Suchard for US$4.1bn in 1993
• Imperial buys tobacco business of Douwe Egberts Van Nelle in 1998
• Imperial buys Rizla in 1997
• Hanson demerges Imperial Tobacco in 1996
• BAT acquires former parent American Tobacco in 1994
• Philp Morris buys Jacobs Suchard for US$4.7bn in 1990
• Philip Morris buys Kraft for US$13.1bn in 1989
• KKR pays US$24bn for RJR Nabisco in 1989
• Philip Morris sells 25% of Rothmans for US$860m in 1989
• Coca Cola Amatil sells tobacco operations to BAT
• Philip Morris buys Kraft for US$13bn in 1988
• Amatil acquires Coca-Cola franchises in Fiji and New Zealand in 1988
• BAT acquires insurer Farmers Group in 1988
• Hanson buys Imperial Group for £2.5bn in 1986
• Philip Morris sells Seven-Up in 1986
• Philip Morris buys General Foods for US$5.8bn in 1985
• R J Reynolds buys Nabisco for US$4.9bn in 1985
• BAT acquires Allied Dunbar in 1985
• BAT acquires insurer Eagle Star in 1984
• R J Reynolds buys Heublein for US$1.2bn in 1982
• Amatil buys Coca-Cola franchises in Austria in 1982
• BAT acquires Marshall Field's in 1982
• Imperial buys Howard Johnson hotel and restaurant chain in 1980
• Tchibo buys Reemtsma Cigarettenfabriken (Germany) in 1980
• Philip Morris buys 25% of Rothmans for US$350m in 1980
• RJ Reynolds buys Del Monete for US$618m in 1979
• BAT buys Argos in 1979
• Philip Morris buys Seven-Up for US$514m in 1978
• British Tobacco (Australia) becomes Amatil (Allied Manufacturing & Trading Industries Ltd) in 1977
• Imperial buys Pillsbury Farms in 1974
• BAT acquires Gimbels in 1973
• Imperial merges with Courage (breweries, retail, 6,000 pubs, 38 hotels) in 1972
• BAT acquires Kohls in 1972
• Imperial acquires Plastic Coatings in 1971
• Philip Morris buys Miller Brewing for US$227m in 1969
• Imperial buys Ross Group frozen foods in 1969
• R J Reynolds buys Sea-Land for US$550m in 1969
• R J Reynolds buys American Independent Oil for US$55m in 1969
• Philip Morris buys Godfrey Phillips in 1968
• Imperial buys HP Sauce Group and National Canning Company in 1967
• British Tobacco (Australia) buys controlling interest in  Coca-Cola Bottlers (Perth), forms soft drinks, snack & frozen food wing under APD name
  The purchase of a
• Philip Morris buys Fabriques de Tabac Reunies for US$12m in 1963
• Philip Morris buys Burma-Shave in 1963
• Philip Morris buys ASR (American Safety Razor) for US$22m in 1960

     concentration

• Imperial buys W & E Faulkner in 1959
• Philip Morris buys Milprint Inc in 1957
• Imperial buys snuff makers J & H Wilson in 1953
• Philp Morris buys Axton Fisher for US$20m in 1944
• Imperial buys E & W Anstie in 1944
• Cullman buys Benson & Hedges for US$850,000 in 1941
• Imperial buys Walters Tobacco Company in 1938
• Imperial buys Hignett Brothers in 1930
• BAT buys Brown & Williamson in 1927
• Imperial buys William Clarke's UK business in 1924

     early concentration

• American Tobacco splits into RJ Reynolds, American Tobacco, Liggett & Myers, Lorillard and BAT in 1911 after US antitrust cases
• British Tobacco Company (Australia) Ltd established in 1904
• British American Tobacco (BAT) formed as joint venture of Imperial Tobacco and American Tobacco in 1902
• American Tobacco sells Ogdens to Imperial in 1901
• W D & H O Wills and Stephen Mitchell & Son merge as Imperial Tobacco in 1901
• American Tobacco buys Ogdens for US$5.3m in 1900
• American Tobacco and Consolidated Tobacco merge as American Tobacco in 1900
• establishment of Union Tobacco (Liggett & Myers) in 1898
• American Tobacco buys P Lorillard for US$6m in 1898
• American Tobacco buys Pfingst, Doerhoefer for US$2m in 1891
• establishment of American Tobacco Co in 1899

     studies

Studies include Ashes to Ashes: America's Hundred-Year War, the Public Health, and the Unabashed Triumph of Philip Morris (New York: Knopf 1996) by Richard Kluger and The Cigarette Century: The Rise, Fall, and Deadly Persistence of the Product That Defined America (New York: Basic Books 2007) by Allan Brandt.

For legal perspectives see Regulating Tobacco (New York: Oxford Uni Press 2005) edited by Robert Rabin & Stephen Sugarman, The Nazi War On Cancer (Princeton: Princeton Uni Press 1999) by Robert Proctor, Up In Smoke: From Legislation To Litigation In Tobacco Politics (Washington: CQ Press 2004) by Martha Derthick.

A supplementary note points to other studies on M&A in the industry and to the history of individual enterprises, such as The Global Cigarette: Origins and Evolution of British American Tobacco 1880-1945 (Oxford: Oxford Uni Press 2000) by Howard Cox, Barbarians at the Gate: The Fall of RJR Nabisco (New York: HarperBusiness 1991) by Bryan Burrough & John Helyar and W D & H O Wills and the development of the UK tobacco industry, 1786-1965 (London: Methuen 1973) by Alford.

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