Business Agreement with Altria in the US
Utilizing KT&G's Global Distribution Network
Joint Acquisition of Sweden's ASF for 262.4 Billion Won
KT&G is joining forces with the American tobacco company Altria Group to make a full-fledged entry into the nicotine pouch market.
On September 23, Bang Kyungman, CEO of KT&G, signed a comprehensive memorandum of understanding (MOU) with Billy Gifford, CEO of Altria, to establish a strategic cooperation foundation in the global nicotine and non-nicotine market. Altria is the leading tobacco manufacturer in the United States, holding a 45% share of the domestic cigarette market.
Bang Kyungman, CEO of KT&G, signed a comprehensive memorandum of understanding (MOU) to establish a strategic cooperation foundation in the global nicotine and non-nicotine market with Billy Gifford, CEO of Altria, on the 23rd, and took a commemorative photo. Photo by KT&G
As a result, KT&G and Altria will jointly acquire a 100% stake in Another Snus Factory (ASF), a nicotine pouch manufacturer based in Northern Europe, for approximately 262.4 billion won. The shareholding structure will be 51% for KT&G and 49% for Altria, with KT&G’s actual investment amounting to 160.5 billion won.
To expand their nicotine pouch portfolio and target the market, the two companies plan to launch ASF’s “LOOP” and Altria’s “on!” products through KT&G’s global distribution network. Furthermore, they agreed to seek ways to improve the operational efficiency of their cigarette business to strengthen market competitiveness and to expand their collaboration by mutually supplementing each other’s portfolios for greater diversification.
A KT&G representative stated, “Based on the profits generated from the rapid growth of our global business, we will pursue high dividends as well as additional share buybacks and cancellations,” adding, “Through the agreement with U.S. tobacco company Altria, we will expand our core business portfolio and enhance our future growth competitiveness.”
On the same day, CEO Bang also announced measures to improve shareholder return policies during an investor relations (IR) session. He introduced a new “shareholder return allocation principle,” stating, “We will efficiently allocate any excess capital generated in the future to maximize both corporate and shareholder value.” Specifically, the plan includes: achieving a total shareholder return ratio of at least 100%, maintaining a dividend payout ratio of at least 50%, setting a minimum threshold for dividend yield, and implementing flexible share buybacks when the stock is undervalued.
This year’s dividend policy has been further strengthened. KT&G set the minimum annual dividend per share at 6,000 won, up 600 won from the previous year. In addition, using funds raised through the liquidation of non-core assets such as real estate, the company will conduct an additional share buyback and cancellation worth 260 billion won starting on the 24th. This is an increase of 100 billion won compared to the additional share buyback and cancellation carried out at the end of last year. Including the increased dividend amount, the total additional shareholder return will reach 276 billion won, which is 171% of the previous year’s level.
As of the end of 2023, KT&G has completed the cancellation of treasury shares amounting to 10.4% of its total shares outstanding. With the upcoming share buyback and cancellation, the cumulative treasury share cancellation ratio is expected to increase further.
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