Tobacco

Loss of French partner a blow for CVC’s Altadis bid

31 May 2007

Club deals are tricky for buyout firms. Squabbles over control are inevitable. That seems to be why PAI left CVC to bid for Altadis alone. CVC will now pick up even more of the equity, making this an unusually concentrated bet. But it could still do with a local partner.

Altadis buyout firms could be stretched

8 May 2007

CVC and PAI Partners have made a E15.5bn offer for the Spanish tobacco company. It would be by far the biggest deal for each firm. It looks like they d have to drum up about E5bn of equity. It s doable, but probably only with some help from other investors.

Private equity’s Altadis bid turns heat on Imperial

4 May 2007

CVC and PAI s E15.5bn offer for the Spanish tobacco group looks at the top end of what rival bidder Imperial can comfortably pay. The UK tobacco firm may yet fight back. But doing so would probably strain its finances and its credibility.

Altadis should be careful in smoking out an auction

30 Apr 2007

After rejecting rival Imperial Tobacco's E15bn bid, the Spanish group is right to seek a private equity alternative. Getting up an auction can be the best way to secure a top price. But Altadis must show it can handle competing bids fairly.

Altadis should talk if Imperial raises

10 Apr 2007

Imperial Tobacco may yet stretch a little past its rejected E47 offer. If it does, Altadis should talk, or explain how it can do better. Otherwise investors may fear Altadis managers want private equity to do what they should do themselves or worse, want to keep their jobs.

Imperial mega rights issue not strictly needed

4 Apr 2007

The tobacco group could finance its bid for Altadis by gearing itself up to the gills. That would cut its cost of capital. But Imperial has promised its bondholders it will stay investmentgrade. That means an unfashionable £4bn rights issue looks on the cards.

Private equity probably needs BAT to clinch Altadis

3 Apr 2007

Buyout firms on their own would struggle to match Imperial, if it increases its bid for the FrancoSpanish tobacco group. But Cinven, CVC and the like might be able to make the numbers add up if they rope in BAT to buy Altadis cigarettes business.

Imperial can’t stretch much further on Altadis bid

19 Mar 2007

The UK tobacco group s E45 a share bid for its Spanish rival has been rebuffed. But synergies alone don t justify much more. True, financial engineering gives Imperial some scope to offer a higher price. But only at the risk of becoming a takeover target itself.

Imperial makes E14bn unsolicited offer for Altadis

15 Mar 2007

At E45 a share, the bid would imply only a 18% premium over Altadis' price before takeover speculation. This leaves room for a counterbid. True, financial engineering gives Imperial some scope to pay more. But if it pushes too far it may become a target itself.

Imperial Tobacco plumps for profitable decline

8 Feb 2007

The UK tobacco firm is spending £1bn to get into the US a nation where smoking faces a slow, painful demise. That s not as crazy as it sounds. The US is a lucrative market. And this deal could put Imperial in a stronger strategic position.

Imperial-Altadis deal may finally stack up

11 Jan 2007

At E10bn, Altadis is expensive. But the UK tobacco group s recent rally means a 25%equity deal could make financial and strategic sense. The FrancoSpanish firm may disagree. It could even turn the tables, with a little help. But that could be even better for Imperial shares.

Big tobacco M&A wave won’t add much value

10 Dec 2006

It s hard to make tobacco mergers stack up. Japan Tobacco may find it especially hard to create value from buying Gallaher. Tobacco companies may be tempted to do deals to prop up flagging growth. But returning more cash to investors would be a better option.

Gallaher bid kicks off tobacco M&A

6 Dec 2006

Japan Tobacco can pay a smoking premium. But other suitors may like Gallaher s position in the UK, emerging markets and cheap smokes. Altria or BAT might also want to unite the Benson & Hedges brand. Whoever loses out will no doubt look to Altadis as a consolation prize.

Altria’s easy money already made

7 Jul 2006

The benefits of a breakup of the tobacco group following the resolution of litigation are mostly reflected in the stock price. Returns now depend on the individual parts Kraft, Philip Morris and international getting their acts together.

Kraft cleans house ahead of spin-off

26 Jun 2006

The food group ousted its CEO, signaling its impending spinoff from parent Altria could be just around the corner. By luring back Irene Rosenfeld Altria hopes to bring in a little Pepsi fizz. That won t be easy to accomplish, however.

Imperial deal for Altadis would stub out value

18 Jun 2006

A tieup between the two tobacco giants might make strategic sense. But it would be hard to justify financially. The trouble is that Altadis s shares are very highly priced. While that s the case, Imperial should bide its time.

Reynolds in $3.5bn chewing tobacco bite

25 Apr 2006

The tobacco group 42% owned by BAT is paying through the cheek to buy the secondbiggest maker of chewing tobacco and snuff. Strategically this makes sense as a hedge against the decline in smokers. But even with 10% growth, the deal looks mildly destructive.

Altadis no easy win for Imperial Tobacco

14 Mar 2006

In the current M&A environment, it's no surprise that investors expect the Spanish tobacco giant to fall to a hostile bid from its UK rival. A deal makes strategic sense. But it would not be cheap. And Imperial's dealings in its own shares suggest it is in no hurry to swoop.

Altria share price gets ahead of itself

15 Dec 2005

The tobacco, beer and food conglomerate s shareholders are understandably excited by its latest victory in the courts. But they are now discounting the absence of any tobacco litigation, and have already priced in a breakup of the group.

Tobacco stocks deserve better treatment

1 Nov 2005

Smoking bans, litigation and declining volumes have seen tobacco stocks lag other European consumer goods. Yet Imperial Tobacco s results prove, they still offer high margins, piles of cash and growing profitability. A 20% discount seems unfair.