Turkey’s Government is hoping that its third attempt to sell the state cigarette manufacturer Tekel will be luckier than the first two.

The Turkish company has a 40 per cent share of the world’s seventh-biggest tobacco market, where 100 billion cigarettes are sold every year. That compares with about 57 billion cigarettes in the UK. Tekel had total sales of about $8 billion (£4.1 billion) last year.

It is an attractive asset because of the size of the market and because many Turkish smokers are gradually switching from lower-quality cigarettes to premium brands, producing opportunities for revenue growth.

On the first two occasions, the Turkish Government played tough, trying to ensure that it gained a top price for the business, but it ended up with egg on its face.

In 2003 Japan Tobacco agreed to pay $1.15 billion for Tekel but Ankara later cancelled the transaction, holding out for as much as $2.5 billion.

It put the company back on the block the following year but on that occasion no bidders came forward because of the high price it was seeking as well as the onerous conditions attached to the sale. The Government insisted that any buyer must keep factories open and use set proportions of Turkish-grown tobacco in their cigarettes.

This time around, there could be fresh problems. Starting next year, Turkey’s Government is planning to push up a special consumption tax on cigarettes by 10 per cent to help it to meet domestic budget targets. Unsurprisingly, the tax rise could hamper the sale of Tekel.

In the past, Paul Adams, chief executive of BAT, a potential bidder for Tekel, has said that the company will not allow the Turkish Government to hold the group to ransom over the price for the manufacturer.

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