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31 August 2011

Bulgaria picks VTB unit for Bulgartabak stake (UPDATE 1)


Tsvetelia Tsolova, Maria Plis (Reuters)

BT Invest, owned by Russia's second-largest bank VTB, has won a tender to buy a 79.8 percent stake in Bulgaria's dominant cigarette maker Bulgartabak for 100 million euros($145 million). 

A sale contract should be signed in 15 days, Bulgaria's privatisation agency said on Wednesday, subject to the approval of its supervisory board. Bulgartabak comprises two cigarette mills and a tobacco processing unit. 

Austrian-registered BT Invest was the sole bidder after British American Tobacco withdrew from the tender earlier this month. 

"We look forward to working with the Bulgarian privatisation agency and concluding the deal in favourable terms for both parties," said Atanas Bostandjiev, chief executive of UK and International of VTB Capital. 

"The current privatisation process could be the first step in establishing VTB Capital's presence on the Bulgarian market." 

The privatisation agency has said the offered price was in line with government expectations and in line with the market value of the holding, which stands at 199 million levs ($147 million), according to Bulgarian stock exchange data. 

BT Invest has offered 33.2 levs per share for the stake, while the company's stock was trading at 27.5 levs at 11.10 GMT, up 3.55 percent. 

Bulgartabak has a 36 percent market share in a country where over 40 percent of the adult population smokes.
Local analysts and industry officials have criticised the government for linking the sale with an obligation to purchase Bulgarian tobacco, saying the option had deterred strategic investors. 

Trade unions concerned about the sale said they will hold a protest in front of the privatisation agency on Friday. 

($1 = 1.355 Bulgarian levs = 0.6926 euro) 
Corporate Communications VTB Capital