Reemtsma goes to Imperial for $5.1bn

THE German tobacco company Reemtsma, the owner of McLaren title sponsor West, has been sold to Britain's Imperial Tobacco for $5.1 billion. The deal will make Imperial the world's fourth largest tobacco company behind Philip Morris, BAT and Japan Tobacco.

Imperial has bought 90% of the Herz Family's 76.3% share in Reemtsma and has an option to buy the remaining 10% before January 2005.

Imperial says that the brands of the two companies do not overlap either in terms of brand values or in geographical markets. Imperial is strong in Western Europe, Africa and Australasia while Reemtsma if big in Eastern Europe and Asia. It is unlikely in the circumstances that there will be any immediate change in West's marketing strategies in F1 although Imperial has not been involved in the sport since withdrawing its JPS backing of Team Lotus in 1986.

Imperial was the first Formula 1 sponsor of any kind, entering the sport with Team Lotus in the summer of 1968 with its Gold Leaf brand. Its John Player Special brand later became one of the strongest brands in F1 history and surveys today still indicate a perception in the public mind that JPS is still involved in racing.

The purchase of Reemtsma will put pressure on Gallaher, the owner of Jordan sponsor Benson & Hedges to do a deal with another company if it is remain independent as the consolidation of the tobacco industry continues.

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