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May, 2008

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United Kingdom
Imperial announces divestment of fine cut and pipe tobacco brands
London - Imperial Tobacco has agreed to divest a number of fine cut and pipe tobacco brands to Philip Morris International for approximately ?254 mn. This divestment of brands in European markets was one of the conditions the European Commission laid down for Imperial Tobacco to acquire Altadis. The divestment is still subject to approval of the European Commission, and covers brands such as Interval, Bergerac, Santoya and Wervicq, Van Nelle, Picadura, and Kilta.

Tobacco monopoly elects new head
Sofia - Bulgartabac Holding, the Bulgarian cigarette-making monopoly, has named Anguel Dimitrova their new Director following allegations of tax evasion against the previous Director, Hristo Lachev. Dimitrova was previously the Deputy Director of the Sofia Tobacco Factory.

Fujian region registers steady growth of cigarette sales
Fujian - The Fujian province of southeast China registered steady growth in the sales of its Seven Wolves and Golden Bridge brands in the first few months of 2008, leading it closer to its annual sales target of 1.6 mn cases (80 bn cigarettes).

From January to March, the Fujianese tobacco industry sold 14.75 bn cigarettes (295,000 cases) of the Seven Wolves brand family through non-commercial channels, ranking 11th among all famous and high-quality cigarette brands in China, as well as rising by 27.4% year-on-year. Sales to other regions of China totaled 5.35 bn cigarettes (107,000 cases) of the Seven Wolves brand family, up 31% year-on-year. Notably, Grade One Seven Wolves reached 1.45 bn cigarettes (29,000 cases), ranking ninth among all Grade One cigarettes, while Grade Two Seven Wolves reached 2.25 bn cigarettes (45,000 cases), ranking 10th among all Grade Two cigarettes. Golden Bridge reached 1.17 bn cigarettes (23,400 cases), up 12.8% year-on-year. In Fujian Province, Soft Grey Wolves sold 150.15 mn cigarettes (3,003 cases), and Soft Red Wolves reached 232.2 mn cigarettes (4,644 cases), up 36.75%.

BAT Malaysia manages growth in spite of challenges
Kuala Lampur - British American Tobacco (Malaysia) Bhd (BAT) continues to be optimistic about growth despite challenges caused by tightening legislation, increases in tobacco smuggling, and inflation. The company had a net profit of RM732 mn in the 2007 financial year, up 2% from 2006, while its turnover rose by 6% to RM3.8 bn. Managing Director Jack Bowles said that BAT will continue focus on generating growth, enhancing productivity, and managing its business responsibility.

According to the Contraband & Unauthorized Cigarette Study made by the Confederation of Malaysian Tobacco Manufacturers (CMTM), illegal cigarette trade levels have increased to 24% in 2007, a 10% increase from the 14% of 2004, while the illegal white cigarettes segment jumped by 32% after the 25% excise hike in July 2007.

Smurfit Kappa closes Spanish factory
Valladolid - Smurfit Kappa Group (SKG) will close its recycled containerboard mill in Valladolid, Spain later on in 2008. SKG will be taking some downtime to optimize the groupís supply-demand balance and to address an increase in inventory levels of recycled containerboard. The cost of these actions is expected to be managed through gains in 2008.

United Kingdom
Palmer & Harvey MBO values supplier at £345m
London - Palmer & Harvey, the supplier of approximately one-third of Britainís tobacco, has changed ownership through a management buy-out valued at £345mn. With turnover of about £4bn, Palmer & Harvey vies with Booker at the top of the wholesale business, supplying independent grocers as well as store chains with tobacco.

Tobacco International - May, 2008

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