LONDON, May 22 (Reuters) - Philip Morris International ( PM )

said on Wednesday it had acquired a 14.7% indirect

minority stake in Egypt's largest cigarette manufacturer,

Eastern Company ( EML ).

PMI, the world's top tobacco company by market value, did

not disclose the value of the transaction. It said as part of

the deal the companies would explore potential areas of

strategic collaboration, including heated tobacco products.

WHY IT MATTERS

Heated tobacco products heat packages of ground up tobacco

but do not burn it in an attempt to avoid the harmful chemicals

generated via combustion.

PMI's IQOS heated tobacco device is already the market

leader globally, but the products are mostly popular in

developed markets.

More recently, PMI has been looking to increase uptake in

developing markets, including via cheaper heated tobacco

devices.

KEY QUOTE

"We look forward to exploring potential areas of cooperation

with Eastern, including opportunities to provide adult smokers

in Egypt with better options than cigarettes," said Fred de

Wilde, PMI's President South & Southeast Asia, Commonwealth of

Independent States and Middle East and Africa.

MARKET REACTION

PMI shares were up 0.5% at 1435 GMT.