Korea's КТ&G, Japan Tobacco International, Philip Morris and a few financial investors have declared interest in the privatization of Bulgaria's state cigarette producer Bulgartabac Holding, according to the consultant of the deal.
A majority stake - 79,83% - in Bulgaria's state cigarette producer Bulgartabac Holding, whose management has been harshly criticized in recent years, was put on sale on Tuesday after years of procrastination.
The long-delayed procedure will be officially given the go-ahead by the agency for privatization and post-privatization control through an announcement in the State Gazette on May 10.
The agency invited strategic and financial investors to buy tender documents by June 10. Binding offers have to be filed by the end of August.
"The buyer of Bulgartabac will be known in September," the Executive Director of the Agency for Privatisation Control Emil Karanikolov said at a press conference on Tuesday.
The bidder with the highest offer will be selected for buyer. No initial price has been set.
The sale of Bulgartabac Holding AD, Sopot-based Vazovski Mashinostroitelni Zavodi or VMZ, and the minority stakes in the electricity distributors have been said to be a must-do task in 2011 due to the sorry performance of the state-owned companies.
Citigroup, the consultant preparing the sale of the state company, has made preliminary inquiries with about 100 potential strategic and financial investors from around the world with respect to Bulgartabac's privatization in order to make sure that all "serious" investors are aware of the sale of the Bulgarian cigarette company.
According to the Economy Ministry, there is a sufficient number of companies interested in the privatization of Bulgartabac because it is an attractive asset even at times of crisis.
The method of privatization – a one-stage competition – has been selected by the consultant, based on the number of interested bidders.
Korean KT&G had voiced interest in the privatization of Bulgartabac as early as during the term of the government of Simeon Saxe-Coburg.
KT&G is the largest cigarette and tobacco company in Korea, whose share accounts for 80% of the local market. Over the last ten years the company has been purchasing from Bulgartabac Bulgarian tobacco used in the manufacture of cigarettes.
Japan Tobacco Inc. (JT) is the third largest tobacco company in the world, having its headquarters in Tokyo. According to Euromonitor data, the share of the corporation in the world market makes 10.5%. JT International (JTI) is the international subdivision of "Japan Tobacco Inc.", formed as a result of purchase of the international tobacco business of American R.J. Reynolds International Concern by the Japanese company. The head office of JTI is in Geneva.
JTI sells cigarette brands including Camel and Salem. It runs 16 tobacco plants outside Japan — in Canada, Kazakhstan, Romania, Serbia, Ukraine, Andorra, Germany, India, Malaysia, Switzerland, Jordan, Tanzania, Tunisia, Turkey and Russia, where it has two sites.
At the end of 2006 the company acquired UK tobacco company Gallaher after its GBP 7.5 B takeover bid for the maker of Silk Cut cigarettes and Hamlet cigars proved successful.
Speaking for Dnevnik daily Martin Braddock, JTI's Regional President, CIS, Romania and Adriatics, confirmed last year that the company is interested in the acquisition of Bulgartabac, but its bid will depend on sale price, planned lay-offs and investments.
The Economy Ministry said it wants to find a buyer for Bulgartabac by the summer of 2011.
In spite of declarations in April 2010 that Bulgaria's Privatization Agency hoped to complete the sale of state-owned cigarette monopoly Bulgartabac in 2010, no such deal went through by the end of December 2010.
The consultant for the Bulgartabac sale, Citigroup Global Markets Ltd, was picked by the Bulgarian government in February 2010.
Two of the less profitable plants of Bulgartabac holding – in the cities of Plovdiv and Stara Zagora – were sold in 2009 through the Sofia Stock Exchange – for BGN 31 M and BGN 18 M respectively.
The holding currently owns the two larger and more consolidated factories in Sofia and Blagoevgrad as well as a number of commercial brands.