Japan Tobacco Inc favors pursuing deals in Southeast Asia and markets where it lacks a presence as it actively seeks to expand overseas, the company’s new CEO said.
The world’s third-largest listed tobacco company is aiming to command about 40 percent of the heated tobacco market in Japan by 2020, Masamichi Terabatake said in an interview yesterday at the company’s headquarters in Tokyo.
A pillar of that growth would be its next-generation device, Ploom Tech, as well as other new devices the company has in development.
Photo: Bloomberg
“We look at economics, population growth and gross margin expansion in markets we want to enter,” said 52-year-old Terabatake, who took the helm at Japan Tobacco this month. “Recently, one such area is Asia.”
The maker of Mevius and Winston cigarettes is targeting acquisitions overseas and expanding its offering of high-tech smoking devices to grow profits as the conventional cigarette market is pressured around the globe.
Japan Tobacco has been slower than its global competitors, such as Philip Morris International Inc and British American Tobacco PLC, in selling next-generation products, which heat tobacco to deliver nicotine.
Underdeveloped markets are more attractive compared with a complicated acquisition, Terabatake said.
Earlier this year, analysts speculated that Japan Tobacco might buy Imperial Brands PLC.
However, the firm has focused on developing nations, such as Indonesia, the Philippines and Ethiopia, where it has spent more than a combined US$2 billion over the past few months acquiring assets.
Terabatake declined to comment on an Imperial acquisition directly.
The tobacco industry has been consolidating as smoking rates decline. After large deals like British American Tobacco’s US$49 billion buyout of Reynolds American Inc, there are few big targets left.
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