BAT sells Russian and Belarusian businesses to local management

British American Tobacco (BAT) has announced its decision to sell its Russian and Belarusian businesses to a consortium led by its Russian management team, bringing an end to an 18-month-long process.

This move follows BAT’s commitment to exit Russia, the world’s fourth-largest cigarette market, in March 2022, in response to Moscow’s invasion of Ukraine.

Western companies have been leaving Russia due to sanctions imposed on Moscow, with some facing asset seizures by the Kremlin. BAT, which held nearly 25% of the Russian tobacco market, stated that it had agreed to sell its business in compliance with local and international laws.

As a result, BAT will no longer have a presence in Russia or Belarus and will not benefit financially from sales in these markets after the completion of the transaction, expected within the next month.

The businesses will be renamed ITMS Group after the sale, and the consortium will own the trademark for BAT brands, including traditional tobacco products and alternatives like Vuse vapes. The exact sale price and terms, including whether BAT has an option to repurchase the business in the future, were not disclosed.

BAT’s decision to divest its Russian and Belarusian operations aligns with similar moves by other multinational corporations facing geopolitical challenges.

Cigarette maker Imperial Brands sold its Russian business in 2022, while BAT’s competitors, Japan Tobacco and Phillip Morris International, have scaled down their activities but have not yet exited the Russian market.

Several other companies from various industries have also chosen to withdraw from Russia, reflecting the complex landscape of international business in the face of geopolitical tensions.

Russia and Belarus accounted for around 2.7% of BAT’s revenue in the first half of 2023, with a slightly lower proportion of its adjusted profit from operations.

Despite the divestiture, BAT remains confident in delivering its full-year guidance, having already accounted for the transfer’s financial impact in its 2022 financial year.

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