Japan Tobacco to Pay $450 Million for Sudan Cigarette Maker

Japan Tobacco Inc. agreed to pay $450 million for a cigarette maker operating in Sudan and oil- rich South Sudan, which gained independence this month after a rebellion that lasted almost 50 years.

Haggar Cigarette & Tobacco Factory Ltd. controls 80 percent of the market in Sudan and is "well established" in the Republic of South Sudan, the Japanese company said. The deal values the maker of Bringi cigarettes at 9.9 times last year's underlying earnings before interest, tax, depreciation and amortization, Japan Tobacco said in a statement yesterday.

Japan Tobacco, the world's third-largest publicly traded cigarette maker, plans to boost overseas profit by at least 10 percent as an aging population and a higher cigarette tax weaken demand at home. Net income may expand 11 percent to 161 billion yen ($2.1 billion) this fiscal year on increased prices in Russia and other markets abroad, the Tokyo-based maker of Mild Seven, Camel and LD cigarettes said yesterday.

"This acquisition is positive because it shows the company is eager to grow overseas," said Mikihiko Yamato, a Tokyo-based analyst at Japan Invest KK. "The company prefers making acquisitions in Asia, but it is difficult to find candidates in the region."

Japan Tobacco gained 3.7 percent in Tokyo trading to close at 350,000 yen, the highest level since Feb. 17. The stock has gained 16 percent this year, compared with a 6.4 percent drop in the broader Topix index.