ECONOMY

Offers for Tekel disappoint Turks

ANKARA (Reuters) – Turkish officials yesterday said Japan Tobacco had placed the highest bid, at $1.15 billion, for the tobacco arm of Tekel, below market expectations for the flagship sale in Turkey’s ambitious privatization plans. Analysts had said Tekel’s tobacco and alcohol arms could fetch up to $3 billion as the government chases revenues under tight budgetary constraints agreed to with the International Monetary Fund (IMF) as part of a $16 billion pact. Privatization administration chief Metin Kilci acknowledged the offers for the cigarette maker, which has a 58 percent share of the Turkish market, were a disappointment. «Our expectations were much higher,» Kilci told officials after announcing the results of the tender. «If I were in the place of (the state tender) commission, I would decide to cancel the Tekel’s tobacco arm tender.» Kilci said the commission would decide in one to two days. Turkey has promised the IMF it will launch privatizations this year that will eventually be worth $4 billion. Turkish financial markets closed before yesterday’s announcement but the size of the largest bid was expected to weigh on sentiment. British American Tobacco also participated in the tender for Tekel’s tobacco division, officials said. US group Altria had also been expected to make a bid for the division but industry sources said it had pulled out of the tender due to competition issues. Altria, which owns Philip Morris and makes top brand Marlboro, already has a 28 percent share of the Turkish market. Japan Tobacco, the world’s No. 3, is third in the Turkish cigarette market with a 10 percent share. It has operated in Turkey for 10 years and its factory in the western port city of Izmir is one of its three big foreign plants. It owns the world’s No. 2 cigarette brand Mild Seven and Camel, Winston and Salem brands outside the United States.