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British American Tobacco Returns to Burma

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Despite the fact that British American Tobacco plc (LON:BATS) acquired CN Creative, a U.K.-based start-up which specializes in the development of ecigarettes, for an undisclosed sum last December, it was downgraded today to Sell today by analysts at Canaccord Genuity.

British American Tobacco Returns to Burma

Apparently, BAT’s acquisition of CN Creative is not enough.

“Our core business is and will remain in tobacco, but we’ve always made it clear that our goal is to provide those adult smokers who are seeking safer alternatives to cigarettes with a range of reduced-risk products that will meet their varying needs,” said Kingsley Wheaton, BAT’s director of corporate and regulatory affairs when the acquisition was announced late last year.

“We believe the innovative ecigarette technologies that CN Creative has been developing over the past few years will help us move closer to achieving this goal.”

Commitment to Thriving eCig Market

But again today saw Canaccord Genuity downgrade both BAT and Imperial Tobacco Group PLC (LON:IMT) when they wrote.

We think electronic cigarettes will prove to be the most significant development in the history of the organized Tobacco industry, stretching back some 200 years. We expect consumers worldwide to migrate from tobacco smoking to e-cigarettes at an accelerating rate through 2020.

Regardless of who is right in this war of ecigarette words, on the same day of this downgrade BAT announced today, that after 10 years, it intended to return to Myanmar after political pressure forced it out over human rights concerns.

British American Tobacco plc (LON:BATS) said it would spend about $50 million on a factory in Burma to produce its London brand of cigarettes after it left the country following an “exceptional” request from the British government to stop doing business there in 2003.

Nicandro Durante, the tobacco group’s Brazilian chief executive, said: “We are truly excited with the post-sanctions development in Myanmar and are keen to play an active part in the country’s economic and social advancement.”

British American Tobacco plc (LON:BATS) joins such companies as Norway’s Telenor in looking to carve out a piece of an economy that some analysts estimate will be worth $300 billion by 2030.

Some, however, remain convinced that British American Tobacco plc (LON:BATS) should be returning to Burma, including Mark Farmaner, director of the Burma Campaign UK, who played a large role in seeing BAT leave the country just 10 years ago.

Burma Encourages Businesses to Return

“Companies can come [to Myanmar] in the right circumstances. They just need to avoid links with people who have dodgy human rights records. All the human rights problems that were under the previous government are still there today.”

Whether Mr. Farmaner has a point should be taken with a grain of salt. If human rights abuses are cleaned up in Burma, well, he’s out of a job.

China Mobile recently withdrew its bid for telecom licenses in Burma, but it’s safe to assume for worries of profitability not human rights violations.




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Brendan Byrne

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