MARCH 15, 1999
Camel and Winston go east
JAPAN TOBACCO, the owner of Mild Seven, has just agreed an $8bn deal to buy all the non-American tobacco business of RJR Nabisco. The deal means that JT will be able to sell Camel, Winston and Salem brands around the world. The deal makes JT the world's third largest tobacco company after Philip Morris and British American Tobacco and marks the first major international expansion for the conservative company, which enjoys a 78% share of the Japanese market but has little market penetration internationally.
In recent years JT has tried to use Formula 1 to promote Mild Seven as an international brand, although this has been largely restricted to Asia. The deal with RJR Nabisco could result in Benetton returning to Camel colors in the future, particularly as there are suggestions that Mild Seven may be supporting the Honda F1 program.
The deal marks a further consolidation in the world tobacco industry and, although RJ Reynold will continue to sell cigarettes in the United States, the company is planning to divide its food and tobacco businesses, leaving Nabisco to trade without the share price being dragged down by the uncertainties surrounding tobacco companies.
Japan Tobacco won the deal over bids from Philip Morris, BAT and a joint bid by SEITA of France and Tabacalera of Spain. The two European companies are now expected to enter into full merger discussions. SEITA boss Jean-Dominique Comolli told French pressmen that there needs to be "a federation of the European tobacco industry" to compete against Philip Morris, BAT and JT. SEITA uses Prost Grand Prix to promote its Gauloises products.
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