JT acquires Mighty Corp

| August 22, 2017

The JT group has signed agreements to acquire the assets of the Philippines-based Mighty Corporation.

In a note posted on its website today, Japan Tobacco Inc. said the group had signed agreements ‘related to the tobacco business of Mighty Corporation (MC) for a total of PHP46.8 billion (approximately US$936 million)’.

‘The assets include MC’s distribution network, manufacturing equipment, inventories and intellectual property,’ the note said.

‘The transaction is expected to be completed in the third quarter of this year following regulatory clearances.’

MC has been involved in a long-running dispute over tax payments but, last month, the Manila Times reported that the Philippines’ government had agreed to accept an initial payment of about P3.5 billion toward the company’s tax liabilities. The Department of Finance (DOF) said it had been informed that a check for P3.44 billion would be issued by JT International Philippines.

The Times story said the DOF had ‘stressed’ that such acceptance did not yet mean it was agreeing to the company’s total settlement offer of P25 billion. Nevertheless, the DOF said also that MC would pay the balance of P21.5 billion on or after the closing of its proposed deal with the JT group.

Meanwhile, in describing why it was making the acquisition, JT said that MC, with 23 percent of the market, was the second largest tobacco company in the Philippines, the 10th largest tobacco market in the world.

‘MC holds a leading position in the value segment, which accounts for more than 50 percent of the industry volume, with strong local brands such as Mighty and Marvels,’ JT said. ‘Its established distribution network reaches outlets nationwide.

‘The JT Group has been in the market for an extended period of time and increasing its presence mainly driven by Winston, a sub-premium product, notably in the urban areas of the Philippines.

‘The transaction enables the JT Group to consolidate its business foundation through expanded distribution and a strengthened brand portfolio, providing the JT Group with more than a quarter of market share in a country with robust economic growth.’

“This transaction is another example of our geographic expansion for sustainable growth in the mid- to long-term,” said Mutsuo Iwai, executive vice president and president of the Tobacco Business. “This major acquisition in South-East Asia adds to our recently announced full-scale entry into Indonesia, and will further enhance our business base in the region.”

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Category: Breaking News, Corporate

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