British American Tobacco agrees to sell Russian business to local management
MOSCOW. Sept 7 (Interfax) - British American Tobacco (BAT) has entered into an agreement to sell its business in Russia and Belarus to a consortium led by local management, the company reported.
The sale is expected to be closed in the next month, after which the business will be renamed ITMS Group.
The agreement envisages maintaining the current labor terms and conditions for employees for two years after the deal has been closed.
The company announced plans to exit the Russian market in March last year, noting that business ownership "is not sustainable in the current environment."
The press release also indicates that Russia and Belarus accounted for approximately 2.7% of the group's revenue as of June 30, 2023.
BAT opened a representative office in Russia in 1991, and began manufacturing tobacco products in 1994. BAT owns a tobacco factory in St. Petersburg, Russia. The company also manufactures tobacco sticks for its Glo heating systems.
According to data in the SPARK-Interfax analytical system, International Tobacco Marketing Services LLC, BAT's wholesale entity in Russia, boosted revenue to 247.2 billion rubles in 2022 from 225.4 billion rubles in 2021, and nearly doubled net profit to 12.1 billion rubles from 6.2 billion rubles, respectively.
Imperial Brands, another large tobacco company, had exited the Russian market earlier, transferring its business to Russian investors associated with Megapolis, Russia's largest cigarette distributor, whose beneficiaries are Igor Kesaev and Sergei Katsiev. The new owners have renamed the Imperial Brands-owned companies as International Tobacco Group and International Tobacco Group Volga, which is the production site.
Philip Morris International said that it was considering restructuring its business in Russia, including transferring assets.
Japan Tobacco International, the largest company in Russia's tobacco market, has announced the suspension of new investments and marketing activities in Russia.
