Philip Morris International Inc
), has inked a $625 million deal to takeover 49% stake in the
United Arab Emirates (UAE) company - Arab Investors-TA (AITA).
The deal will give Phillip Morris 25% stake in its distribution
partner in Algeria - Société des Tabacs Algéro-Emiratie (STAEM) -
which manufactures and distributes Philip Morris' Marlboro and
L&M cigarette brands in Algeria.
STAEM has been jointly held by AITA (51%) and Algerian
state-owned Société Nationale des Tabacs et Allumettes SpA (49%)
The deal will allow the Marlboro owner to secure a strong
foothold in the Algerian tobacco market where its brands occupy a
major share. The deal will prove accretive to the company's
earnings in fiscal 2014. Algeria has recently witnessed a surge
in the smoking population, particularly female and young
As per market research firm, Euromonitor International, Philip
Morris' major competitor in Algeria is state-owned Société
Nationale des Tabacs et Allumettes, which is a leader in high tar
cigarettes. The Algerian tobacco industry is expected to grow in
the coming months as the government has not imposed any strict
Moreover, the partnership with UAE-based AITA will open
business opportunities in Egypt and certain other North African
and Middle Eastern markets which offer great growth
In a separate development, Philip Morris completed the buyout
of 20% interest its its Mexican tobacco business - Grupo Carso -
for approximately $700 million on Sep 30. Since PM has business
outside the U.S., these strategic deals will help it to penetrate
faster into growing markets and maintain sales and margins
Other Stocks to Consider
PM currently has a Zacks Rank #4 (Sell). Other stocks that the
investors might consider include
British American Tobacco
Schweitzer-Mauduit International Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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