Philip Morris aims for Sampoerna

Gavin Lipsith

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Indonesian ambitions for the dominant global cigarette supplier

Philip Morris has announced plans to acquire a controlling stake in Indonesian tobacco manufacturer Sampoerna. Subject to regulatory approval, the company will acquire 40% of the company from stakeholders - including the Sampoerna family – before putting a general offer for the remaining shares. The deal values the company at over $5bn – a premium of about 20% on the current share value - and will make the combined company the second largest cigarette supplier in Indonesia.

Kreteks – the clove cigarettes that are Sampoerna's main products – account for about 92% of tobacco sales in Indonesia, with Philip Morris' Marlboro brand accounting for 4%. In recent years the company's international business has expanded dramatically with strong gains through its kretek brands in Latin American markets, and in Asia and Europe with the launch of ST Dupont cigarettes.

In a statement, Philip Morris International CEO Andre Calantzopoulos confirmed the group's intentions. "This is a tremendous growth opportunity in an expanding market," he said.

Last year Sampoerna sold 41bn cigarettes and commanded a 20% share of the Indonesian market. Operating income grew by about 20% compared with 2003 results, according to Philip Morris.