British American Tobacco has acquired an 85% stake in Bentoel, Indonesia’s fourth-largest cigarette maker, for $494m.

In 2008, Bentoel sold 17.7 billion cigarettes and recorded EBITDA of $53m in the 12 months to 31 March.

Indonesia is the world’s fifth-largest tobacco market by volume, with sales of around 250 billion cigarettes a year. Kreteks – cigarettes made from tobacco and cloves – make up 93% of the local market.

“This transaction represents an excellent strategic opportunity to enter the very large and growing Indonesia kretek market and will provide a platform for future growth,” said John Daly, British American Tobacco’s Asia-Pacific director.