JTI seals purchase of Mighty for P46.8 B

The Japan Tobacco Group has completed the P46.8-billion acquisition of Mighty Corp. from the Wongchuking family, heralding a new era in the local cigarette industry with multinational cigarette companies now the dominant players.

Japan Tobacco Inc. (JTI), the third largest cigarette company in the world, said the deal was closed yesterday, nine days after the Philippine Competition Commission, the government’s anti-trust body, approved the acquisition.

Caesar Wongchuking, the youngest son of the late Mighty founder Wong Chu King, said his family welcomed the deal.

“My mom has been the strength and foundation of our family. She inspires us. She knows in the long term it’s best for the family. And we will continue to perpetuate our father’s legacy,” he told The STAR.

JTI, the parent company of JTI Philippines, said the acquisition is in line with the group’s geographic expansion for sustainable growth.

“It also provides a nationwide distribution network in the Philippines and strengthens the group’s brand portfolio with the addition of local brands such as Mighty and Marvels,” JTI said.

The company said the transaction would not have any material impact on JT Group’s consolidated performance for fiscal year 2017.

On Aug. 29, the PCC approved the deal, noting that the transaction would not result in anti-competitive coordinated behavior.

JTI Philippines officials, led by general manager Manos Koukourakis and representatives of the Wongchuking family led by matriarch Nelia Wongchuking, signed the acquisition agreement at Mighty’s head office in Makati on Aug. 22.

With the completion of the acquisition, JTI Philippines now owns the sales and distribution network, manufacturing and equipment and inventories of Mighty, while JT International SA (JTI SA), an affiliate of JTIP, will own the trademarks and associated intellectual property of Mighty Corp. and Wong Chu King Holdings Inc.

Mighty’s assets include three operating plants in its sprawling nine-hectare factory in Malolos, Bulacan, a state of the art tobacco processing plant and two cigarette manufacturing facilities.

With the buyout, the Philippine cigarette industry is practically left with two players led by multinational companies.

PMFTC, a partnership between Philip Morris and Lucio Tan’s Fortune Tobacco, is the market leader with a 71 percent share. Mighty held a 23 percent share while JTI accounted for 4.2 percent of the market.

According to JTI’s earlier disclosure, Mighty’s gross sales reached P18.8 billion last year with operating profit of P600 million.

Mighty, which marks its 72th year as a cigarette company this year, started in 1945.

It was founded by Wong who founded La Campana Fabrica de Tabaccos Inc., the company that would become Mighty.

In the early ’80s, the Wongchuking family decided to develop new Virginia-tobacco type cigarettes and in 1985, they changed La Campana’s name and brand to Mighty.

Wong died in 1987 but the business continued with his wife Nelia and sons Alex and Caesar at the helm.