British American Tobacco (BAT) revealed that it intends to acquire the tobacco assets of Bosnian holding firm Fabrika Duhana Sarajevo (FDS) from a regional government in the country.
The transaction is being carried out indirectly via CID Adriatic Investments (CID) and is part of attempts by Bosnia’s Bosniak-Croat Federation to plug a hole in its budget by privatizing state-owned enterprises.
Using financing provided by BAT, CID bought the government’s 39.9% stake in FDS. The company said it would make a later bid for the remainder of the company at the same price, also using BAT financing.
“Upon successful completion of CID’s takeover offer for the remaining shares of FDS, British American Tobacco will enter into exclusive negotiations for the potential purchase of certain tobacco assets of FDS,” BAT said in a statement.
The deal is said to have been structured so that BAT would not need to take possession of FDS’s non-tobacco assets, which include banking and real estate operations. The sale of the government’s stake is expected to bring 42.7 million Bosnian marka (US$24.4 million). CID will later offer the same price of BM 83.5 per share for the remainder of the company.
The remainder of FDS is owned by local subsidiaries of Austria’s Raiffeisen Bank and Italy’s UniCredit SpA, as well as investment funds and small shareholders.
BAT already owns tobacco plants in Serbia and Croatia.