Comment from Fiona Cincotta, a senior market analyst at www.finspreads.com
With tobacco consumption declining significantly in most western countries the tobacco giants are looking to gain access to new markets or to consolidate in order to cut costs and increase profits. That is exactly what we are seeing here with BATS acquisition of Croatian cigarette maker TDR for £394 million.
The acquisition is a strategic move to increase BATS presence in the three core markets of Croatia, Serbia and Bosnia and provide a platform for the company to expand its business in central Europe. Simultaneously BATS is seeking to expand its operations in Brazil in a bid to drive off dwindling sales and a tough trading environment in western countries.