BAT agrees purchase of Bosnian FDS tobacco business from Austrian fund

SARAJEVO, Jan 26 (Reuters) - British American Tobacco (Kuala Lumpur: 4162.KL - news) (BAT) has reached a principle agreement to acquire the tobacco assets of Bosnian holding firm Fabrika Duhana Sarajevo (FDS) from an Austrian fund, the two companies said in a joint statement on Thursday.

Using financing provided by BAT, Austria's CID Adriatic Investments (CID) had bought a 78.7 percent stake in FDS for the total of 84.3 million Bosnian marka ($46.3 million). It first bought a 39.9 percent stake from the regional government in September and then in December an additional 38.8 percent stake from small shareholders and funds.

The final agreements will be signed in the next few days and the transaction is expected to be completed in the first half of this year, following an FDS shareholder approval vote and the relevant regulatory approvals, the statement said.

FDS has banking and real estate operations as well as tobacco interests.

"BAT will acquire all FDS tobacco brands and retail business (Tobacco Press) from FDS," the statement said. "BAT will also enter into a contract manufacture agreement with FDS for the continued production of the acquired brands by FDS in Sarajevo."

CID will continue to develop the non-tobacco parts of FDS independently, it said.

BAT last week agreed a $49.4 billion takeover of U.S. rival Reynolds American Inc (NYSE: RAI - news) , creating the world's biggest listed tobacco company.

(1$ = 1.82 Bosnian marka) (Reporting by Daria Sito-Sucic; Editing by David Evans)