JAKARTA -Cigarette maker PT BAT Indonesia (BATI.JK) said Tuesday it plans to merge with sister company PT Bentoel Internasional Investama (RMBA.JK) in order to create a stronger entity.

“The combined market share of the two companies is expected to be around 8%,” BAT Indonesia, a unit of British American Tobacco PLC (BTI), said in a joint statement with Bentoel.

It said each BAT Indonesia share will be exchanged for 7.68 Bentoel shares.

The merger proposal follows the 99.74% acquisition of Bentoel’s shares in July by British American Tobacco.

BAT said the merger is subject to approval from both shareholders of the companies and legal consent from Bapepam, the country’s market watchdog.

The two companies will hold shareholder meetings Dec. 4 for the approval of the merger plan.

After the merger, Bentoel’s assets will increase to IDR4.90 trillion from IDR2.35 trillion previously, the statement said.

In morning trade Tuesday, Bentoel shares were up 7.7% at IDR700 on the news.

-By I Made Sentana; Dow Jones Newswires; 62-21 39831277; I-Made.Sentana@dowjones.com

Tags: smoke collaboration

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