Philip Morris International (PMI) has taken a significant step in expanding its footprint in the Egyptian tobacco market by acquiring the factory assets of Eastern Company S.A.E, Egypt’s largest cigarette manufacturer. The transaction, valued at EGP 1.584 billion (approximately $32.61 million), includes the sale of land, buildings, and currently rented equipment of factory no. 9 to the United Tobacco Company (UTC), a subsidiary of PMI.
The board of directors of Eastern Company S.A.E approved the deal, which was based on the average of three valuations provided by companies certified by the Central Bank of Egypt (CBE). The transaction is subject to the approval of the Industrial Development Authority. If this approval is not issued or if any party fails to adhere to the contract terms, the agreement will be terminated unless both parties agree otherwise.
Under the terms of the contract, UTC will waive its right to recollect the remaining annual rent value of the factory, which was paid in full according to the rent contract ending on April 26, 2026. Additionally, the contract includes provisions for entering into swap contracts, facilitating further financial flexibility for both parties.
This acquisition is part of a broader trend of privatization and investment in Egypt. The country launched its Initial Public Offering (IPO) Programme in February 2023, aiming to offer 35 state-owned companies to strategic investors by June 2024, with a target to raise $5 billion. In this context, Eastern Company was listed among the companies whose stakes were nominated for sale.
In November 2023, Egypt’s Ministry of Public Enterprise sold a 30 percent stake in Eastern Company to the UAE’s Global Investment Holding Company for EGP 19.336 billion, covering 669 million shares.
In a related move, PMI announced in May 2024 that it had acquired an indirect 14.7 percent minority stake in Eastern Company. This acquisition aims to explore potential strategic areas for long-term collaboration in technology, manufacturing, and innovation, including heated tobacco products.
