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Donskoy Tabak Plans to Sell its Shares

Published on August 15th, 2014 00:00

Donskoy Tabak, Russia’s biggest independent cigarette manufacturer, is cooperating with JPMorgan Chase & Co. (JPM) to assist it come across a customer despite a government policies on tobacco usage, as outlined by company's representatives.

Privately owned Donskoy Tabak could possibly get interest from prospective customers like Imperial Tobacco, Europe’s second largest cigarette maker, explained the spokesperson, who asked not to be named since the issue is non-public. The procedure can slow or quite possibly be stopped because of the latest Russian turmoil with Ukraine, one of the people explained.

Representative for Donskoy, Imperial Tobacco and JPMorgan refused to give any reply.

The world’s second major tobacco market is merging after the government increased taxes and constrained both points of sale and cigarette use in public areas trying to decrease usage. The largest tobacco retailer, Megapolis Distribution BV, sold about 40 % stake several months ago to Philip Morris International and Japan Tobacco.
Donskoy Tabak sales increased around 26 % to $1 billion last year, supported by the tax boost, based on the company’s official website. Profits before interest, tax, depreciation and amortization constituted 4.6 billion rubles.
The turmoil in the area has already resulted in two other consumer firms stopping projects to market shares in Russian businesses to the public. Metro AG several weeks ago postponed the preliminary public offering of its Russian Cash & Carry device since market factors were no more suitable. The ruble has fallen around 7.7 % against the euro this year despite the most detrimental diplomatic situation ever since the Cold War.

Donskoy Tabak, held by business owner Ivan Savvidis, sells such cigarette brands as Kiss, Armada, Richmond and many others in Russia and also exports to nations as Ukraine. Savvidis’s Agrokom Group, located in the southern Russian city of Rostov, also owns a fishery and real estate enterprise.