global tobacco giants were relatively slow to enter the electronic cigarette industry, but have made up for the lag, securing their positions in the market through mergers, acquisitions and/or rolling out new brands. Evidently, it comes as no surprise that the global electronic cigarette market has been growing exponentially since 2012 and has reached $4.8 billion as of 2014. In a recent development, one of the leading tobacco company Japan Tobacco, Inc. (JTI) acquired an established e cigarette brand Logic Technologies to increase its footprint in the North American market which is expected to grow at a CAGR of over 22% through 2015 to 2025.
Since its inception in 2010, Logic Technologies has been able to gain a significant market position in terms of revenue generation, competing with some of the giants from the tobacco industry such as Philip Morris, British American Tobacco, and Imperial Tobacco among others.
The acquisition presents a win-win situation for the both the acquiree and the acquired company. JTI currently holds a share of 55% of the total Japanese tobacco market, and has significant brand presence across the globe. Logic Technology accounted for over 20% of market share in the U.S. electronic cigarette industry. With the merger, JTI will be able to leverage on Logic’s existing customer base and distribution channel, thereby, positioning itself in the league of the big tobacco both in the U.S. and further consolidate its market position in the global electronic cigarette market.. The transaction value remains undisclosed.
JTI has been pretty active in the M&As sector of the market entropy, targeting to get hold of the major chunk of the revenue generation. For instance, in February 2015, JTI acquired the patents and trademarks from Ploom Inc and in mid June 2014, it acquired the U.K. e-cigarette brand E-lites from previous owner Zandera.
The year 2014, saw a flurry of events in the form of product launch, mergers and acquisitions, and partnership in the e-cigarette industry; Reynolds acquired Lorillard for an estimated $27.4 billion in July 2014, PMI acquired NicoCigs in June 2014, Lorrilard announced that Skycig would become Blu ecigs from May 2014, and Imperial Tobacco launched ‘Puritane’ in the U.K. Market in Feb 2014, and the list is never ending.
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