Bulgaria’s Competition Watchdog Gives Green Light to Bulgartabac Privatization

Bulgaria’s Commission for Protection of Competition gave a go-ahead to Vienna-registered BT Invest to acquire the country’s tobacco monopoly, cigarette maker Bulgartabac Holding.

Bulgartabac building

Bulgartabac building entrance

The news was reported Tuesday by the Bulgarian National Radio, BNR, citing the Commission’s decision, which came on the grounds the deal must be given a green light since it would not obstruct effective and loyal competition.

BT Invest, owned by Russia’s second-largest bank VTB , won at the end of August a tender to buy a 79.8% stake in Bulgartabac for EUR 100 M.

Austria-registered BT Invest, behind which stands Russia’s second-biggest bank VTB, remained the only bidder for the Bulgarian tobacco monopoly after British American Tobacco and Austria-based CB Family Office Service dumped the sale.

Strategic investors have been deterred by the obligation to purchase Bulgarian tobacco.

Two of the less profitable plants of Bulgartabac holding – in the cities of Plovdiv and Stara Zagora – were sold in 2009 through the Sofia Stock Exchange – for BGN 31 M and BGN 18 M respectively.

The holding currently owns the two larger and more consolidated factories in Sofia and Blagoevgrad as well as a number of commercial brands.

It remains unclear who exactly is behind BT Invest.

On Monday, Bulgaria’s Economy and Energy Minister, Traicho Traikov, confirmed earlier medai reports that VTB is highly likely to resell the holding’s assets.

“This may happen any minute as the contract bans the resale of the holding in the next ten years, but does not ban a change in the ownership of the new owner BT Invest,” Traikov told the morning broadcast of Nova TV channel on Tuesday.

Asked whether the deal is profitable enough for Bulgaria, the minister replied:

“I would say this is a decent deal. This deal had to be signed. I am glad it did not flop again. We raked in the money, pulled the liquidity from the company. I have done everything I had to do in my capacity of minister.”

Bulgartabac acquisition by VTB may prove to be more profitable for the holding than expected, as the new owner will most probably first modernize it and then resell it to strategic investors, according to the minister.

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