Private equity group CVC Capital Partners is preparing a counterbid for Franco-Spanish tobacco firm Altadis, a source close to the deal told Reuters on Thursday.
The Madrid-based source did not say whether CVC was bidding alone or in a consortium, and did not disclose what price it might offer. Britain's Imperial Tobacco raised its bid for Altadis to 12 billion euros ($16.1 billion) on Tuesday.
In London, people familiar with the situation confirmed that CVC had approached Altadis, and that fellow private equity firms PAI and Cinven had also spoken to the maker of Gitanes cigarettes and Montecristo cigars.
"Private equity are working furiously on getting this ready," said one of the sources, adding that firms could group themselves into a consortium of two or three to bid together.
An Altadis offer from CVC, which ditched a 10.1 billion pound offer for British supermarket J. Sainsbury on Wednesday, could scupper the 47-euros-a-share approach from the world's fourth-largest, tobacco company Imperial. An Altadis spokesman declined to comment on a possible bid by CVC.
Altadis has said it will not let Imperial inspect its books at the offer price -- a 2 euro improvement on its initial March 15 approach -- raising the possibility that the maker of Lambert and Butler cigarettes will take its offer hostile.
Britain's Times newspaper reported on March 29 that British American Tobacco, the world's second-biggest cigarette producer, was in talks with private equity firms on a possible joint bid for Altadis, the world's number five.