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Philip Morris International to Acquire 49% Interest in Arab Investors

 Philip Morris International Inc. (PM) agreed to acquire a 49% interest in Arab Investors-TA for $625 million, a deal that aims to strengthen the cigarette maker's profits in the Algerian market.

The maker of Marlboro and L&M brand cigarettes has been seeking to increase its presence in emerging markets as cigarette sales volumes continue to weaken in many developed countries. In May, the company agreed to buy Grupo Carso SAB's (GPOVY, GCARSO.MX) 20% stake in its Mexico tobacco business for about $700 million, giving Philip Morris complete ownership of its Mexican unit.

Under the latest deal, Philip Morris will secure a nearly 25% interest in the Societe des Tabacs Algero-Emiratie, a joint venture between United Arab Emirates-based Arab Investors-TA and Algerian state-owned Societe Nationale des Tabacs et Allumettes SpA.

"With the fourth-largest total [gross domestic product] in Africa, and an estimated cigarette market of 30 billion units, Algeria holds tremendous potential for future growth," said Miroslaw Zielinski, president of Philip Morris's Eastern Europe, Middle East and Africa region and PMI duty free business.

Philip Morris has had a partnership relationship with the joint venture since 2005. The venture manufactures and distributes under license Philip Morris's Marlboro and L&M brands, which together hold a significant share of the international brands sold in Algeria, placing Philip Morris's brands in the No. 2 spot.

"Over the last five years, Algeria has been a key driver of the growth of our premium brands in North Africa and the investment we are announcing today will significantly enhance our prospects in the country," Mr Zielinski said.

The deal is expected to add to Philip Morris's per-share earnings next year.

Shares closed Friday at $87.33 and were inactive premarket. The stock is up 4.4% this year, trailing the broader market.