The dominant cigarette seller in its home market, Japan Tobacco has been seeking to diversify in recent years in the face of declining smoking rates in Japan. The company is currently 50% owned by the Japanese government, which has been reviewing the stake in anticipation of a possible divestiture.
Eddy Pirard, western Europe regional president of Japan Tobacco, called the deal "an attractive opportunity to enhance our presence in the growing and profitable RYO/MYO market in Europe."
The buyer said that it has targeted roll-your-own for growth, saying the sector has grown by about 3.9% per year between 2000 and 2011. Japan Tobacco valued the deal at about 12.3 times Grayson's expected €38.7 million in 2012 Ebitda.
"We will capitalize on Gryson's well-managed, innovative and successful business and their expertise," Pirard said. "In line with our strategy to address the needs of adult consumers, we are building a strong brand portfolio across a number of tobacco product categories."
Japan Tobacco's first big overseas move came in 1999 when the company spent $7.8 billion for the international operations of R.J. Reynolds Co. and formed Japan Tobacco International. The unit in 2007 bought Gallaher plc of Weybridge, U.K., for £9.4 billion in 2007, and added assets in Africa and Brazil in 2009.
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