ECONOMY

Papastratos takeover by Philip Morris International

One of the biggest acquisitions of the past few decades took place yesterday, when cigarette company Papastratos was acquired by a subsidiary of Philip Morris International, the European branch of US tobacco giant Altria Group – formerly Philip Morris – the largest company in the sector worldwide. «The main shareholders of ‘Papastratos Cigarette Company SA’, representing approximately 75 percent of its shareholding capital, reached an agreement with Dutch company Philip Morris Holland BV, a subsidiary of Philip Morris International, for the transfer of their shares,» Papastratos announced in a statement. Philip Morris will pay up to 371 million euros for the shares in Papastratos. A key person to the transaction is Philip Morris International’s president, 46-year-old Andreas Kalantzopoulos. Last January, in his Switzerland office, Kalantzopoulos had highly praised Papastratos to Kathimerini, saying it was an especially serious and reliable partner. He had singled out for praise Papastratos’s chief executive, Christos Komninos, who, in his two years with the company since leaving Coca-Cola HBC, had made Papastratos an even more export-oriented firm than before, keeping it at the forefront of Greek tobacco firms. Komninos, one of the best Greek managers, had rejected a top-level post with Olympic Games organizers Athens 2004 before taking over at Papastratos. «Philip Morris International has a decades-long successful relationship with Papastratos in Greece. With this acquisition, we get attractive and developing brands, such as Assos, President and Papastratos,» Kalantzopoulos said after the announcement. «The main reason for this agreement is to ensure the company’s long-term future… There is no doubt this is a positive development for Papastratos. We had a totally successful cooperation with Philip Morris International for many years. With this cooperation now assured, the company can look into the future with even greater optimism,» Komninos said. (Asked about the acquisition yesterday, National Economy and Finance Minister Nikos Christodoulakis was unreservedly positive. «All business partnerships, which make Greek businesses stronger are positive… [They help] the businesses’ development, enhance an outward-looking culture and help their position in international competition,» he told reporters.) Papastratos has been producing Philip Morris’s Marlboro brand in Greece since 1975. Philip Morris renewed the contract in 1998 for a period of 12 years. The acquisition is subject to the approval of Altria Group’s board, the approval of regulatory authorities and the successful outcome of due diligence of Papastratos’s accounts. The maximum price set was 18.15 euros per share, which, according to the due diligence results, may be discounted by up to 1 percent. The price excludes the 2002 dividend, which management will propose to be set at 1 euro at today’s annual general meeting. This will mean a dividend return of 5.4 percent, based on the company’s Monday closing price of 19.10 euros per share. If the acquisition is completed, Philip Morris Holland BV will make a public offer for the rest of the shares within 30 days. The price must be at least as high as the original acquisition price. (The main shareholders of Papastratos are all descendants of the four brothers who founded the company in 1931. No individual holds more than 6.645 percent in the company.)