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BAT to Buy Indonesian Clove-Cigarette Maker for $494 Million  

British American Tobacco Plc, Europe’s largest cigarette maker, will buy control of PT Bentoel Internasional Investama of Indonesia, the nation with Asia’s most lax restrictions and most smokers after China and India.

BAT today said it will pay $494 million for 85 percent of Bentoel, marking its first foray into clove-flavored cigarettes, known as kretek in Indonesia for the crackling sound they make when lit. Bentoel, whose brands include Star Mild, will help BAT boost its local market share to about 9 percent.

BAT, the London-based maker of Lucky Strike, is expanding in a country with few of the restrictions seen in Europe and the U.S. More than 90 percent of Indonesia’s tobacco users smoke kretek, which can contain double the nicotine and almost triple the tar of conventional tobacco, and minors can buy a cigarette for less than 4 cents.

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