Japan Tobacco Inc. has agreed to buy Russia's Donskoy Tabak for 90 billion rubles ($1.6 billion), strengthening its leading position in Russia as competition from cigarette alternatives erodes its domestic market share.
Donskoy Tabak has a 7 percent share in Russia, the world's third-largest tobacco market, Japan Tobacco said in a statement Friday. The Tokyo-based company already controls about a third of the cigarette business in Russia. While tax increases and restrictions on smoking in public places have taken a toll, Russia still has one of the highest smoking rates in the world.
"For a number of years now this market has been a cornerstone of our group's earnings growth," Mutsuo Iwai, president of the company's global tobacco business, said in the statement.