Rothmans shelves Asian merger

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The Independent Online
ROTHMANS International has bowed to shareholder pressure and shelved plans to merge its Asian operations.

The tobacco group wanted to create a regional holding company for its Singapore and Malaysian businesses and refloat the combined operation on three exchanges.

Rothmans planned to build a united force in the battle for a share of the massive Asian cigarette market, but the merger was unexpectedly rejected by Malaysian shareholders last January.

Rothmans tried to revive the scheme and embarked on a round of talks to win support but yesterday's announcement signalled that it had failed.

Rothmans said there were no immediate prospects of reviving the proposals. Jan du Plessis, finance director, said: 'We discussed with institutions the issues involved and concluded that we could not progress with the proposals.' He said no specific alternative scheme was put to the shareholders.

He rejected suggestions that Rothmans' Asian plans had been thrown into disarray. 'The growth opportunities in Asia are exciting and we have the cash flow and management to go forward there.' There were no plans to restructure the Asian business that would exclude the Malaysian operation. 'We will continue as before,' he said.

Rothmans hoped the merged company would have the marketing and financial strength to attack markets in China - which accounts for about one-third of global cigarette consumption - and Japan. But Malaysian investors felt that the proposals would have taken investment out of the country and diluted their control over local operations. The combined operation was to be based in Hong Kong.

Last year Rothmans completed a restructuring under which it shed its luxury goods businesses and became exclusively a tobacco company.

Analysts said a reorganisation to focus on the Asian market had been important to the new strategy. One said: 'The shock was the rejection in January, but it is still disappointing they have not been able to salvage anything.'

Rothmans' shares fell 6p to 389p.