British tobacco firm Gallaher has agreed to buy Cita Tabacos de Canarias for €85 million euros.
Gallaher, whose brands include Silk Cut and Benson & Hedges, said it would also assume €20-million of debt.
Cita makes, distributes and sells cigarettes and cigars in the Canary Islands, Spanish Peninsula and Portugal.
The company holds around 50 per cent of the Irish market.
