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An article published earlier today on Bloomberg, pointed out that British American Tobacco’s (BAT), $49.4 billion purchase of Reynolds American Inc. (RAI), has created a mega large tobacco company, rivalling Philip Morris International Inc. (PMI), and leaving Japan Tobacco Inc. lagging behind.

In Japan, Philip Morris’s cigarette iQOS is all the fury, with the company being unable to keep up with the demand. On the other hand, Japan Tobacco is also struggling in its two largest markets overseas, Russia and the U.K., due to local constraints and taxes. Hence why many are predicting that CEO Mitsuomi Koizumi might consider making an acquisition in order to move towards his goal, making Japan Tobacco the world’s biggest tobacco company.

“When Japan Tobacco come under pressure, they go out and do a deal.” Owen Bennett, Analyst, Jefferies

“When Japan Tobacco come under pressure, they go out and do a deal,” Owen Bennett, an analyst at Jefferies. When faced with similar difficulties in the past, the company acquired the international operations of R.J. Reynolds for $8, and eight years later it followed up with the $19 billion purchase of Gallaher Group.

Bennett added that with the U.K.’s Imperial Brands Plc, placing  fourth on a global level, it will be Japan tobacco’s prime target. He estimates that the former could fetch 45 billion pounds ($56.7 billion), approximately 23 percent more than its current market value.

Aspiring to expand geographically

Eddy Pirard, who had led Japan Tobacco’s acquisition of the international rights to Natural American Spirit, has been selected to oversee the company’s overseas business as from this April. Inline with Bennett’s predictions he said that the company’s business plan for 2017 includes a plan to expand geographically, “notably through acquisitions.”

“We will continue to take a number of strategic initiatives to strengthen our brand equity, geographic reach and emerging products to attain sustainable profit growth in the mid to long term.” Masahito Shirasu, spokesman for Japan Tobacco

“We will continue to take a number of strategic initiatives to strengthen our brand equity, geographic reach and emerging products to attain sustainable profit growth in the mid to long term,” said spokesman for Japan Tobacco, Masahito Shirasu, whilst declining to comment about the speculation related to possible future deals with Imperial.