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British American Tobacco's takeover of Twisp wins South African approval

14th August 2019

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British American Tobacco's (BAT) proposed takeover of e-cigarette maker Twisp won approval from South Africa's Competition Tribunal on Tuesday after the UK-based group agreed to a series of conditions.

The local unit of BAT, the world's second-largest tobacco company by sales, announced the deal in 2017 as part of its efforts to increase its offering of so-called next-generation products or alternatives to smoking cigarettes.

But the deal had faced opposition, with the Competition Commission having said in July 2018 it recommended the prohibition of the deal and local rivals saying in May this year they wanted to intervene in the proposed merger.

The commission later changed its recommendation to a conditional approval.

BAT, like rivals, is striving for a bigger chunk of the global market for smoking alternatives as volumes of traditional cigarettes continue to slide.

Under conditions placed on the deal, the combined group would not be allowed to agree with retailers to allocate their products more than 70% of visible sales space given to e-cigarettes. They also won't incentivise retailers to deny space to rival products.

The conditions will apply for five years.

The Tribunal also said there should be no retrenchments or job cuts as a result of the proposed deal for a period of two years from the date on which the transaction is implemented.

BAT South Africa (BATSA) and Twisp, which have not put a value on the deal, welcomed the decision.

"BATSA has been impressed by Twisp's unique product offering, and plans to expand this for customers, while growing Twisp's leadership position," said BATSA Chief Executive Soraya Benchikh.

In July the South African unit of Philip Morris International Inc opened a flagship store in Johannesburg for its alternative heated tobacco product IQOS.

Edited by Reuters

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