AP News, April 10th, 2007
Altadis SA, which makes the Gauloises, Gitanes and Ducados cigarette brands, said Tuesday it rejected a sweetened takeover offer from Britain-based Imperial Tobacco Group PLC worth about $16.1 billion.
The company said its board believes the offer of 47 euros per share ($62.85) offer _ up 4.4 percent from Imperial Tobacco's initial approach _ does not "reflect the strategic value of the company, nor the diversity of its unique assets."
Imperial Tobacco, the maker of Regal, Lambert & Butler, Davidoff cigarettes and Golden Virginia rolling tobacco, confirmed that it made a revised proposal and said in a statement that it considered it a full and fair price.
The company also said it requested access to limited financial information in order to establish whether there may be additional value which it had not taken into account in its revised proposal, but this was rejected by the Altadis board.
Last month, Imperial Tobacco approached the Franco-Spanish company with a preliminary offer of 45 euros ($60.18) a share with a view to a potential cash offer for 100 percent of the company.
The world's fourth largest tobacco maker said Tuesday that it continued to believe that a combination with Altadis was strategically compelling and in the interests of both companies' shareholders.
An acquisition of Altadis would see Imperial close the gap on its rivals _ Atria Group Inc.'s Philip Morris business, Japan Tobacco Inc. and British American Tobacco PLC. Imperial recently agreed to buy Commonwealth Brands, the maker of USA Gold and Sonoma cigarettes, from Houchens Industries Inc. for $1.9 billion, giving the company a foothold in the U.S market.
Altadis, meanwhile, said it will continue "analyzing the best options for the company, shareholders and employees."
Altadis shares fell 0.5 percent to 47.48 euros ($63.50) in Madrid, while Imperial fell 0.3 percent to 2,257 pence ($44.32) on the London Stock Exchange.
Analysts said Altadis' rejection was unlikely to be the end of it, with some expecting a higher offer to come.
"The endgame starts once Imperial decides the friendly approach is not working and goes hostile _ something we continue to think it is prepared to do," said Dresdner Kleinwort analyst Matthew Jordan.
Spanish broker Banesto said in a note to investors that Altadis remains highly attractive as its main divisions _ cigarettes, cigars and logistics _ could be sold separately.
"It seems that the (bidding) process isn't finished, and that we could hear more news about potential higher offers," it said.
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http://www.altadis.es
http://www.imperial-tobacco.com
