The chronicle of Eger Tobacco Factory
On the great ship
Days and months passed - as one might say in a fairy tale - and in the spring of 1990 the State Property Agency was established to channel the flood of privatization cases. Time and the government brought the political decision whereby the privatization of the tobacco industry was pushed to the head of the queue. Whether a good decision or not, the fact is that it reflected reality. Maybe the State Property Agency in managing privatization wanted to produce some quick successes, or it was a conscious political decision to get some cash from the purchase price of a few prospering companies in order to be able to pump up other collapsed firms. In March 1990 a letter arrived from the Lausanne centre of Philip Morris requesting a joint study on the possibility of establishing a joint venture company and they also asked that we cancel negotiations with other interested parties while the analysis was ongoing. In an answer the Eger Tobacco Factory refused to accept the exclusivity of Philip Morris concerning negotiations, adding that the conditions translated into figures as based on the Company Council decision were considered as the starting point for the company's whole approach to privatization. In August 1990, Philip Morris made a concrete proposal for a joint venture cooperation agreement with the Eger Tobacco Factory in which it specified a minimum 75% share. At the same time it had fewer consultations with the factory direct, all the while banging ever louder at the gates of the State Property Agency as owner. This, it has to be admitted, was only logical. After all, when making a purchase we too approach the seller and not the product! A foreign majority wasn't to the Eger Tobacco Factory's taste, but finally it became clear to all that even after the privatization of the company whatever the opening allocation of ownership shares it would only be a question of time and money before a foreign majority ownership stake was established. Philip Morris was informed of
