Tobacco

BAT deserves to trade at a premium

29 Jul 2005

The UK tobacco giant managed to grow volumes by 2% this half. Pretty impressive for a mature business in a besieged market. Yet BAT trades at a 7% discount to the sector. Given its enviable access to fastgrowing emerging markets, the stock deserves a revisit.

Will tobacco fall from favour?

2 Mar 2005

The previously neglected sector became a market darling as investors focused on cash. European tobacco stocks roughly tripled since 2000. But the sector also has poor growth prospects, especially given the risk of smoking bans. Valuations now look stretched.

Gallaher jumps on bid rumours

11 Feb 2005

There is some logic to a deal and only rarely is there such smoke without fire. The UK tobacco group's stock is up about 35% since September on talk that Japan Tobacco might make a bid.

UK smoking laws set to tighten

16 Nov 2004

Banning smoking only in pubs where food is served is unlikely to affect pub or cigarette companies much directly. That such a ban can be contemplated is a sign of changing social mores. And that will hurt tobacco company sales in future.

BAT faces many headwinds

27 Jul 2004

The UK tobacco group hasn t sorted out all its problems with the RJR merger. Canada looks like a bloodbath. The strong pound and a likely lower than expected share buyback aren t going to help BAT either.

US antitrust probe threatens BAT/RJR deal

10 Jun 2004

That matters for BAT. Selling to RJR allowed it to distance itself from the US tobacco nightmare. Anything that threatens that may put pressure on the stock.

BAT closes valuation gap with rivals

24 Feb 2004

Investors are assuming that the RJ Reynolds deal will go through without a hitch. But what about the risk of a forced disposal? After years of being overly pessimistic on BAT, investors have now thrown caution to the wind.

Imperial Tobacco raises synergy targets

17 Nov 2003

The tobacco group is squeezing 25% more in costs out of its Reemtsma acquisition. But with Germany hiking its tobacco tax, it may not be able to hang on to all the benefits.

Tobacco groups learn lesson

6 Nov 2003

It shouldn t be that surprising that Turkey s tobacco privatisation failed to nab Morocco and Italy s steep price tag. Two potential buyers Altadis and BAT have already overpaid once. And Philip Morris was hobbled by competition concerns.

BAT clinches smart US deal

28 Oct 2003

The $6.3bn merger of its US operations with RJR has multiple benefits. But the biggest prize may lie in convincing investors that US litigation is no longer a threat. That could spark a rerating of the stock.

Tobacco companies need more discipline

5 Aug 2003

Tobacco companies may think they need to go for broke. But that s not much comfort to their investors. The Marlboro man is paying a fat price for Serbia's tobacco monopoly. BAT and Altadis also both overpaid in recent privatisations.

BAT buys ETI for E2.3bn

17 Jul 2003

The AngloAmerican group paid 50% more than its rivals bid, yet faces the risk that Philip Morris will end a huge distribution contract. Altadis set the precedent for paying whopping prices in Morocco's tobacco auction. Now BAT has done the same in Italy.

RJR, BAT mull US tobacco merger – report

9 Jul 2003

It is easy to see why the two groups would be tempted to talk. The situation in the US is pretty dire. But a big merger between RJR and BAT's US unit would be a risky proposition.

US dividend tax cut reveals the joys of yield

19 Jun 2003

Perhaps. But if a wall of money does speed across the Atlantic, it will be a bet on oldfashioned capital gains not dividend income. Some investors believe that European stocks will benefit most as they pay out twice as much in dividends as US equities.

Altadis pays E1.3bn for Morocco tobacco stake

2 Jun 2003

So far, the FrancoSpanish tobacco has shown an admirable restraint in international deals. Now it is catching up. Regie des Tabacs is selling for more than twice its asking price, and in a sealed bid auction. No souk haggling there.

Tobacco investors still kicking

29 Apr 2003

Just look at Imperial Tobacco and Altadis. The two stocks are barely off September highs. But just because the sector hasn t suffered a derating doesn t mean there are no opportunities. BAT deserves a second glance.

Philip Morris junks 2003 eps forecast

13 Nov 2002

The group blames its US tobacco business for the second forecast revision in as many months. Although Philip Morris s problems seem to be domestic, European tobacco groups should watch out.

Philip Morris junks 2003 eps forecast

13 Nov 2002

BAT could afford £5bn buy-back

29 Oct 2002

The tobacco group doesn't want to commit to handing back cash to its shareholders. But if it can't find a good acquisition, it should shell out the cash.

BAT could afford £5bn buy-back

29 Oct 2002