Philip Morris, the world's biggest cigarette maker, offered to buy Indonesia's PT HM Sampoerna for about 48 trillion rupiah (US$5.1 billion) to expand in a market of 141 million smokers.

　　Philip Morris International Inc, a unit of New York-based Altria Group Inc, is offering 10,600 rupiah a share for Sampoerna, Indonesia's third-largest cigarette maker, the firms said yesterday.

　　Philip Morris has already agreed to buy a 40 percent stake from the founding family for the same price, a 20 percent premium to last Thursday's close in Jakarta.

　　Tobacco companies including Philip Morris, maker of Marlboro cigarettes, and British American Tobacco Plc are expanding in countries such as China and Indonesia as rising taxes and health concerns cut the number of smokers in the United States and Western Europe.

　　The purchase of Sampoerna would be the biggest ever in Indonesia by an overseas investor.

　　"This type of acquisition fits very much into their game plan of dominating as many markets geographically as possible," said Timothy Ghriskey, chief financial officer at New York-based Solaris Asset Management, which oversees US$650 million of shares.

　　Sampoerna makes "kretek" cigarettes, which contain a mixture of tobacco and sweet-smelling clove spice and sell for as little as 53 US cents per pack.

　　They account for about 90 percent of the 200 billion sticks sold each year in Indonesia, according to industry association Gappri, which estimates 141 million of the country's 238 million people are smokers.

　　The takeover of Sampoerna would beat rival Reynolds American Inc's US$3 billion acquisition of Brown & Williamson Tobacco Corp last year in the United States.

　　(Bloomberg News)