Imperial Looks to Create Empire

Imperial Tobacco revealed plans for a pounds 20 billion-plus cigarettes and cigars giant after unveiling a possible 11.5 billion euros (pounds 7.87 billion) offer for European rival Altadis.

The move, described as a “friendly approach” by Imperial Tobacco, adds to recent consolidation in the sector.

The Bristol-based company said: “Discussions are at a very early stage and there can be no certainty this approach will lead to an offer.”

Imperial’s interest comes after Gallaher shareholders backed a pounds 7.5 billion bid from Japan Tobacco last week.

Imperial made its first step into the US market in February last month after buying Kentucky-based Commonwealth Brands from Houchen Industries for almost pounds 1 billion.

Imperial Tobacco is the world’s fourth largest tobacco company with brands including Regal, Embassy and Lambert & Butler.

Its offer for Altadis, if accepted, would close the gap on larger rivals Philip Morris, Japan Tobacco and British American Tobacco.

Altadis is Europe’s third largest cigarette manufacturer, with 60 per cent of sales in France and Spain, and made 118.6 billion cigarettes last year.

The company is also the world’s leading cigar maker – making more than 3.2 billion last year – with dominant positions in the US, French and Spanish market.

Altadis employs more than 27,000 staff and last year made net income of 453 million euros (pounds 309.2 million) on sales of pounds 3.97 billion euros (pounds 2.71 billion), although profits were hit by an increase in Spanish excise duties.

Imperial, which sells cigarettes and tobacco in 130 countries, lifted pre-tax profits 13 per cent to pounds 547 million in the first half of last year.

The company also produces Golden Virginia and Drum rolling tobacco, and Rizla rolling paper.

Imperial employs 14,500 staff in 130 countries. It has more than 1,500 staff in the UK, based at its head office and cigar factory, both in Bristol, and its cigarette factory in Nottingham.

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