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Imperial Shares Slip on Altadis Takeover Delay

Imperial Tobacco, which is looking to take over rival Altadis, met forecasts with a 12 percent rise in annul earnings on Tuesday, but a delay until January in completing the Altadis deal hit its shares.

The world's fourth-biggest cigarette firm, which makes Britain's two top-selling brands Lambert & Butler and Richmond, and also West and Davidoff in Germany, said it expects approval by the Spanish regulator CNMV soon for its 12.6 billion euros ($18.16 billion) Altadis deal.

"We expect clearance very shortly and to complete the Altadis deal in January 2008," Chief Executive Gareth Davis told a conference call after announcing annual results.

But the shares drifted down 1.5 percent on what analysts said was profit taking and some disappointment that completion of the Altadis deal was now delayed from the previous target of the last quarter of 2007.

The British group reported adjusted earnings per share of 136.7 pence for its financial year to September 30, in line with analysts' consensus forecast of 136.4p and within a range of 135.4 to 137.4p.

"These were solid results, bang in line with consensus," said analyst Jonathan Fell at Deutsche Bank.

Imperial's Davis reiterated that the group will launch an equity rights issue to fund the Altadis deal within a year of announcing its agreed offer, or July 18, 2008, and issue the minimum amount of equity -- seen by analysts at 5 billion pounds - to maintain an investment grade on its debt.

Imperial agreed in July 2007 to buy Gauloises and Fortuna cigarette maker Altadis for 12.6 billion euros in cash, but Spanish takeover law changed in August and this is the first deal to be examined under the new rules.

Imperial saw its worldwide volumes rise 7 percent to 200 billion cigarettes with good growth from Davidoff, West and JPS, and also helped by the acquisition in April of the fourth largest cigarette group in the U.S, Commonwealth Brands.

The Bristol-based group increased its annual operating profits by 9 percent to 1.48 billion pounds, while the company raised its full year dividend 12 percent to 69.5 pence a share.

Imperial shares have outperformed the FTSE 100 by 11 percent but underperformed rival British American Tobacco by 5 percent since the start of the year.