British and American Tobacco

History

Early Years

On the 29th September 1902 the UK's Imperial Tobacco Company merged with the American Tobacco Company. Ending a trade war each company agreed not to operate in the other firm's home country. Businesses outside the UK and US were then transferred to the British and American Tobacco Company, giving them operations in Germany, Japan, Canada, Australia, China and South Africa.

Over the next ten years the company expands into India, Egypt, Holland, Belgium, Sweden, Norway, Finland, East Africa and Malaysia. By 1910 the group was selling over ten billion cigarettes worldwide.

B.A.T becomes British

A major event in the company's history was in 1911 when British and American Tobacco become British owned by divesting its shares in the joint venture. B.A.T became listed on the London stock exchange leading to British investors buying most of its American partners shares.

The company then continued expanding acquiring Argentine firm Bozetti and Co. in 1913. Then in 1914 a tobacco manufacturer in Brazil, Souza Cruz was bought.

World War One

The First World War in 1914 had a very positive impact on company sales, increasing B.A.T's sales to twenty five billion due to the increased demand from soldiers.

In the Years following 1921 when Cigarrera Bigot Sucs was acquired in Venezuela acquisitions were also made in Chile, Mexico and Central America.

Expansion into US

In 1927 B.A.T made an important move into the American tobacco market through the acquisition of Brown & Williamson, a small North Carolina company. By this time it was already becoming one of the worlds leading tobacco manufacturers, controlling one hundred and twenty subsidiaries and employing over seventy five thousand workers, running profits of around six million pounds per annum.

Hold on supply chains

In 1932 company depots developed international distribution networks which became subsidiaries of the company. In the same year B.A.T were able to gain control of supply chains through manufacturing operations and leaf-growing in India, Brazil, China and Nigeria.

World War Two

The war had a bad impact on the group. Sales of cigarettes in China had exceeded fifty five billion, however the Japanese invasion brought these to a halt for four years starting in 1937. By 1942 profits had fallen to three million pounds per annum, staying at that level until the end of the war.

After the war inflation made trading conditions difficult, hampered more so by the high price of leaf and the need to replace assets such as factories lost during the war.

Post war

Between 1953-55, measured by company profits, British and American Tobacco was the third largest company in Britain, Germany and France. Then in 1956 as an act to expand its predominance in the international brand market B.A.T obtained the Benson and Hedges business.

Diversification

The early 1960's saw the group diversify into other industries and markets; paper and pulp, cosmetics and food. Initially buying stakes in Wiggins Teape and Mardon Packaging before acquisitions in 1964 including the Tonibell Ice Cream Company and Lentheric Fragrance House. B.A.T's subsidiaries also began to invest separately in the food industries of South Africa and Australia.

In 1966 companies profits exceeded the landmark one hundred million pounds for the first time after the acquisition of cigar manufacturers Henri Wintermans. By 1970 B.A.T operated in fifty different countries supplying from one hundred and forty factories across the globe.

UK operations

In 1972 B.A.T could finally operate fully in the UK after gaining ownership of the company's original brands due to the revocation of the 1902 agreement with the Imperial Tobacco Company.

Reorganisation

By 1976 the group was the UK's third largest firm and had become the biggest tobacco manufacturer in the world. This was achieved through reorganisation of the company, operations were now coordinated under British and American Tobacco Industries, a new holding company.

The group acquired several new brands, including Kent, which is now one of its four most profitable international brands, via the acquisition of Lorillords at the end of the decade.

Expanding

More acquisitions were carried out through the 1980's including Eagle Star in 1984, Allied Dunbar a year later and in 1988 the Farmers group. This made B.A.T industries the largest UK based insurance company. With increasing profits the company was offered a hostile takeover bid, to avoid this it was decided the group would refocus their manufacturing to just tobacco and financial services.

New Opportunities

The 1990's saw the break-up of many state monopolies, leading to a range of new trading opportunities opening up. Making the most of the improved situation and new companies in B.A.T Industries markets many acquisitions were made across Eastern Europe. The most important of the period, and arguably of the group's history, was that of the American Tobacco Company in 1994. This gave B.A.T ownership of two of its four presently most important brands - Lucky Strike and Pall Mall.

Diversification 2

In 1988 B.A.T divested its financial services business into B.A.T p.l.c, becoming a company listed separately on the stock exchange. The acquisition of Mexico's leading tobacco firm Ligarrera La moderna was made in the same year.

Reynolds International

A year later a merger with R.J Reynolds, the worlds forth largest tobacco company, used to increase market share and competition towards the industry giant Altria. The deal included the final of B.A.T's presently most profitable brands Dunhill.

Recent past

In 2001 the company made a series of new investment across the globe in countries such as Turkey and Nigeria. At the same time land was secured for a factory in China and the company came the first in its industry to release a social report.

2003 was an important year for B.A.T, acquiring three large firms - Siberias Duvanska Industija