Bidding war breaks out for Spanish cigarette firm 04/05/2007 00:00

4 May 2007

MADRID - A bidding war was about to break out on Friday for Spanish tobacco firm Altadis, after it unveiled a potential EUR 12.8bn offer.

The EUR 50 a share offer from private equity groups CVC Capital and PAI Partners trumps an earlier bid of EUR 12bn from UK firm Imperial Tobacco.

The BBC reported Altadis, maker of Gauloise cigarettes and Cohiba cigars, said its board would meet soon to discuss the latest offer.

It has already spurned two approaches from Bristol-based Imperial as too low.

The bid from UK-based CVC and France's PAI is conditional on approval from the Altadis board and acceptance from shareholders representing 75% of the firm's holdings.

Analysts widely expect the approach to trigger another offer from Imperial, but the group refused to be drawn on whether it would table an improved bid.

The tobacco sector has seen a spate of takeovers recently as the industry consolidates in the face of numerous smoking bans.

In December last year, Japan Tobacco agreed to buy Silk Cut maker Gallaher for $19bn.

And in February, Imperial Tobacco - which employs 14,500 staff in 130 countries - agreed to buy the US cigarette maker Commonwealth Brands for £974m.

A deal between Imperial and Altadis would narrow the gap on larger rivals Philip Morris, Japan Tobacco and British American Tobacco.

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Subject: Spanish news