KARACHI, Jan 19: The Philip Morris International (PMI) announced on Friday that it will further acquire over 50 per cent stakes in the Lakson Tobacco Company that will bring an inflow of $338.9 million in Pakistan.

It is a major deal as the Lakson is the second largest cigarette manufacturer in the country after Pakistan Tobacco.

“It’s a big deal as Lakson has 47 per cent share in the Pakistani market,” Shahid Ahmed Khan, executive director of Lakson Tobacco, told Dawn. The PMI will buy 50.21 per cent stakes which will accumulate 90 per cent share for the PMI.

“The PMI will acquire an additional 50.21 per cent stake in the Lakson Tobacco from major shareholders in a transaction valued at Rs20.62 billion ($338.9 million),” said an official release issued by the PMI.

“The Philip Morris International already has 40 per cent stakes,” said Khan, adding it was the confidence of the company which resulted in more foreign investment.

The PMI would buy the shares from a number of Lakson Tobacco's principal shareholders for PKR 666.89 per share.

Based on a price per share of PKR 666.89, Lakson Tobacco is valued at Rs41.07 billion.

The Philip Morris International will pay cash for all shares tendered and expects the tender offer to be completed within 90 days, subject to customary regulatory review and approvals.

Lakson Tobacco is Pakistan's second largest tobacco company, with an estimated cigarette volume of 29.8 billion units in fiscal year, ending 30 June, 2006, generating net revenues of approximately Rs10 billion.

Pakistan is the growing market of 63 billion units of cigarettes and the sector is a major revenue generator for the government.

Morven Gold is the leading brand in the market with an estimated 37 per cent market share, complemented by Diplomat and Royals.

Additionally, Lakson Tobacco is the licensed manufacturer of PMI's Marlboro and Red & White brands in Pakistan.

Khan said this foreign investment was a proof of growing investors’ confidence in Pakistan's economy.

Pakistan witnessed a substantially high foreign investment last year and is expected to receive about $3 billion during this fiscal.

However, most of the foreign investment came either in the financial sector or oil exploration and telecommunications.

The investment in a cigarette manufacturing company could lead to diversification of foreign investments.

"Our additional investment in Lakson Tobacco gives the PMI a significant presence in one of the top 20 cigarette markets in the world," said Andre Calantzopoulos, President and Chief Executive Officer of the PMI.

"Lakson Tobacco is a very well established and managed company with a strong brand portfolio, including the market leader Morven Gold. This transaction provides the PMI with an excellent opportunity to further develop Lakson Tobacco's brands and to deploy its international portfolio in Pakistan."