Philip Morris Dumps Colombia Tobacco

US-based cigarette company Philip Morris International says it has decided not to pursue the acquisition of Colombia’s Protabaco. The buyer says the conditions the Colombian regulators imposed “ultimately proved to be too burdensome.” Philip Morris does not say what the conditions were. Philip Morris agreed to buy Protabaco in July 2009 for $452m in cash, but Colombia’s Superintendencia Financiera blocked the deal in June 2010, saying it could significantly reduce competition as the combined company would have had 78% market share. In October, it allowed the buyer to pursue the target, but only if it shed some assets, among them the Premium cigarette brand, according to local press reports. Colombian equity analysts say British American Tobacco (BAT), which has also been rumored to be interested in buying Protabaco, would probably experience the same problems should it try to buy the target. BAT is also a market leader with brands such as Kool, Kent, and Belmont. Had it been approved, the acquisition would have been Philip Morris’ second in Colombia. In 2005, it bought Compania Colombiana de Tabaco, known as Coltabaco, the largest cigarette manufacturer in that country, for $300m.