Turkey handed over control of cigarette maker Tekel to British American Tobacco Plc (BATS) for $1.72 billion today, the second-biggest sale of a government-owned company to a foreign buyer.
BAT made the payment in a single installment, Metin Kilci, head of the country's asset sales agency, said at a ceremony in Ankara. The London-based company won a February auction to purchase Tekel
Foreign direct investment in Turkey in the first four months of the year slowed to $5.3 billion, about half the amount in the same period last year. The country needs foreign investment to help finance a current account deficit that widened to $41.9 billion in the 12 months to April, or about 6.3 percent of gross domestic product.
``We're proud to make one of the biggest foreign investments in Turkey at a time when international markets are suffering a liquidity crisis,'' Johan Vandermeulen, BAT's Turkey manager said. ``We plan to continue investing in Tekel brands.''
After the purchase, BAT expects to be the second-biggest cigarette company in Turkey, Vandermeulen said. Philip Morris International has 41 percent of the market. BAT is buying the rights to Tekel's brands and six factories, according to the asset sales agency.
Turkey in January passed legislation giving bars, cafes and restaurants 18 months to become smoke-free. The ban may cut the Turkish market by 4 or 5 percent, Tuna Turagay, BAT's director of corporate relations in Turkey, said today.
The largest sale of a government-owned company to a foreign buyer was the 2005 sale of a majority stake in the telephone company to Saudi Oger Ltd, Kilci said.
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