Megapolis structure might become new owner of Russian business of Imperial Brands - newspaper
MOSCOW. April 22 (Interfax) - Fortuna Cigar House (SDF) could become the new owner of the Russian business of British tobacco concern Imperial Brands, the Kommersant newspaper reported, citing two sources on the tobacco market.
Fortuna Cigar House, founded in Odessa in 1999, has been operating in Russia since 2011 as a joint venture with the Megapolis distributor of Igor Kesaev, Sergei Katsiev, and Ukrainian businessman Vitaly Belous. The company sells cigars, tobacco, smoking accessories, and materials and equipment, running its own retail outlet.
According to the SPARK-Interfax analytical system, 50.01% of SDF LLC belongs to ZAO TK Megapolis, and the remaining 49.99% belongs to Cyprus-based BVG Cigar House Fortuna LTD. SDF's revenue to Russian Accounting Standards in 2021 totaled 4.09 billion rubles, and its net profit was 404 million rubles.
Imperial Brands in Russia confirmed the deal to Kommersant, adding that the investor will be named later. SDF and Megapolis did not provide comments.
UK-based Imperial Brands Plc, a division of Imperial Tobacco, produces cigarettes under brand names that include Davidoff, Gauloises, JPS, Fine, and West.
Imperial Brands said on April 20 that it had transferred its Russian business to investors based in Russia, subject to finalization of the registration of the transaction with local authorities, expected to take place shortly. The company estimates a non-cash write off of around GBP225 million for this transaction.
Imperial Brands said in March that it was suspending operations in Russia, including production at its factory in Volgograd, as well as sales and marketing. The company then began talks with a Russian legal entity on transferring the business.
In Russia, the company operates through Imperial Tobacco Volga LLC, the production entity, and Imperial Tobacco Sales and Marketing LLC, which saw its revenue fall 1.1% to 69.94 billion rubles and net profit 71.4% to 141 million rubles in 2021, according to SPARK-Interfax.
Imperial Brands has held around 5.5% of the Russian tobacco market, according to business analysts cited by Kommersant.
The editor-in-chief of news agency Russian Tobacco, Maxim Korolyov, was quoted by Kommersant as saying that he believes that all brands produced by the company in Russia will likely continue to be produced under a temporary license.
Imperial Brands is not the only tobacco company to announce leaving the Russian market. British American Tobacco plc , which produces the brands Dunhill, Kent, Vogue, Rothmans, Lucky Strike, Java, and others, has also said that it is leaving. British American Tobacco has initiated the process of a quick transfer of its business in Russia in accordance with international and local legislation, it said.
Tobacco concern Philip Morris International , producer of Marlboro, L&M, Bond Street, Parliament, and others, is considering restructuring its business in Russia, including transferring assets.
Japan Tobacco International, the largest company on the Russian tobacco market, producing the brands Winston, LD, Camel, Sobranie, Donskoy Tabak, Kiss, Play, and others, has said that it is halting new investments and marketing activity in Russia.