Japan Tobacco to buy Philippine cigarette maker Mighty for $936M

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Women holding parasols walk past a logo of Japan Tobacco Inc (JT) outside the company's headquarters building in Tokyo, Japan, May 18, 2016. REUTERS FILE

TOKYO – Japan Tobacco Inc said on Tuesday it would buy the tobacco business of the Philippines’ Mighty Corp for about $936 million as it aims to gain a foothold in the market.

The transaction is expected to be completed in the third quarter following regulatory clearance, the company said in a statement.

Facing a shrinking smoking population at home, Japan Tobacco has been on a buying spree in emerging Asian markets.

This month it agreed to buy an Indonesian maker of “kretek” tobacco and clove cigarettes, together with its distributor, for $677 million, giving it a bigger footprint in the world’s second-largest tobacco market.

Mighty Corp. had for years built up a reputation as one of the most successful home-grown tobacco firms in the Philippines, but this year was rocked by allegations it had routinely used fake tobacco tax stamps, thus allegedly averting payment of billions in excise taxes.

The Philippine government recently accepted the first tranche of a multibillion-peso sum that is described as a settlement but which authorities said did not preclude the filing of cases against the company.