Philip Morris International Inc., the world’s largest publicly traded tobacco company, agreed to buy a stake in Societe des Tabacs Algero-Emiratie for about $625 million to expand in Africa.
The investment involves taking a 49 percent stake in United Arab Emirates-based Arab Investors TA, which in turn owns 51 percent of the Societe des Tabacs Algero-Emiratie venture, New York-based Philip Morris said today in a statement. Algeria’s state-owned Societe Nationale des Tabacs et Allumettes SpA owns the rest of the venture.
The acquisition gives Philip Morris, which gets all of its sales outside of the U.S., a greater presence in Northern Africa. Societe des Tabacs Algero-Emiratie already has partnered with Philip Morris since 2005 and is licensed to manufacture its Marlboro and L&M brands.
Algeria has the continent’s fourth-largest gross domestic product and “tremendous potential for future growth,” Miroslaw Zielinski, president of Philip Morris’s Eastern Europe, Middle East and Africa region as well as its duty-free operations, said in the statement.
Philip Morris fell 0.8 percent to $86.59 at the close in New York. The shares have gained 3.5 percent this year, compared with an 18 percent increase for the Standard & Poor’s 500 Index.