Altadis takeover takes its toll on Imperial earnings

Imperial Tobacco Group Plc reported a 45 percent drop in first-half profit yesterday on costs for buying Altadis SA and said it will sell stock worth 4.9 billion pounds to current investors to help fund the takeover.

Net income dropped to 233 million pounds in the six months through March from 421 million pounds a year earlier, the Bristol, England-based company said yesterday.

Imperial agreed to buy Madrid-based Altadis in July of last year, months after unveiling the acquisition of US cigarette maker Commonwealth Brands.

Most of the Spanish company's sales come from its domestic market and France, adding to its allure for Imperial, which is expanding in new locations because its main UK and German markets are shrinking.

"The focus will be to see how Altadis is performing," Rogerio Fujimori, an analyst at Credit Suisse in London, said.

The takeover gave Imperial, Europe's second-largest cigarette maker, cigarette brands including Gauloises and the world's largest manufacturer of cigars.

Investors will have the right to buy one new share for every two held as of May 15, said Imperial, the maker of Lambert & Butler and Davidoff cigarettes.

It will sell 338.7 million new shares for 1,475 pence each, 44 percent less than Monday's closing price in London trading.

Imperial rose 16 pence, or 0.6 percent, to 2,618 pence in London on Monday. The stock has slipped 3.5 percent in 2008, while larger competitor British American Tobacco Plc, the maker of Pall Mall cigarettes, is little changed.

The cigarette maker had said costs related to the Altadis purchase would lop 110 million pounds from first-half profit.

Agencies

(China Daily 05/21/2008 page21)