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June, 2007

SMOKE Magazine - Cigars, Pipes, and life's other desires

JT completes acquisition of Gallaher Group Plc

Staff Report

Japan Tobacco Inc. is stepping up to become a true industry giant.

Japan Tobacco Inc. (JT) recently announced that its acquisition of the British-based Gallaher Group Plc (Gallaher) is now complete and Gallaher is officially part of the JT Group. The final price tag for the property was reported at £7.5bn (approximately ¥1.78tn). The acquisition will launch JT to becoming the third largest global cigarette manufacturer with 10.5% of the market (behind Altria and BAT with 17.7% and 12.1% market share respectively). With the purchase of Gallaher, JTI’s stable of brands will grow to include established names such as Benson & Hedges, Silk Cut, and Russia’s number one brand, Liggett Ducat. The acquisition will give JT a more geographically balanced portfolio of brands (including giving it a presence in the lucrative EU and CIS markets), greater Virginia-blend expertise, and experience with other tobacco products including the growing snus market.

JT recently appointed a new Executive Committee of the company’s international operation, JT International (JTI), which will lead the integration of Gallaher. The Executive Committee will continue to be headed by Pierre de Labouchere and will include two former Gallaher executives, Stefan Fitz and Eddy Pirard, who will manage the Central Europe / Nordic region and the United Kingdom / Ireland, respectively. The development of an integration plan is underway and should be completed in August.

“I am pleased to welcome Gallaher and its employees into the JT Group. We have already enjoyed excellent support and co-operation from the Gallaher team which promises well for a successful future together,” said Hiroshi Kimura, President and CEO of JT. “This acquisition is a significant milestone in the development of JT’s international tobacco business, which was built upon the expertise and commitment of its management and workforce. Gallaher will provide JTI with significant economies of scale, better geographical balance and stronger market positions, as well as further growth opportunities.”

Tobacco International - June, 2007

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