Smoke signals
The UK's Imperial Tobacco announced an agreement to buy Spanish cigarette and cigar maker Altadis SA, in a $17.9 billion deal. Imperial beat out (it seems) private equity fund CVC Capital Partners in a bidding war.
The merger will make a European tobacco giant (#2 after BAT), with leading positions in the UK, France, Germany, and Spain. It will reinforce Imperial's rank as the world's #4 tobacco company.
This deal follows a smaller one earlier this year, in which Imperial bought US-based Commonwealth Brands for $1.9 billion. Commonwealth is the #4 US cigarette maker, and makes the brands Malibu, Montclair, Sonoma, Riviera, Tuscany, and USA Gold. Imperial, whose origins go back to 1901, has swallowed up a number of other tobacco companies this century, including German manufacturer Reemstma, and French company Tobaacor, a major seller in Africa and Southeast Asia. Imperial makes such cigarette brands as Lambert & Butler, Davidoff, DuMaurier, West, Woodbines, and JPS cigarettes. It also sells cut tobacco.
Altadis was formed in 1999 when the former French and Spanish state tobacco monopolies merged. It sells Gauloise, Gitane, and Ducados cigarettes. It is the world's largest seller of cigars, as a 50% partner with the Cuban government in Habanos Cigar company. It sells one out of every four cigars sol worldwide, with such brands as Montecito, Partagas, and Don Diego that are popular in Europe. In the US it sells such domestic cigars as Phillies Blunts, Muriel, Roi Tan, and El Producto, as well as imports like Montecristo, Romeo y Julieta, H. Upmann, and Quintero.
The cigar business may be the new company's ace in the hole. As a Wall Street Journal article ("Imperial Agrees to Acquire Altadis for About $17.9 billion", 7/18/06) notes, "The market for Cuban cigars is expected to mushroom in the U.S. should Fidel Castro die and a new government one day be recognized for normal-trade status with Washington."
As sales in Western countries slowly decline, a world presence becomes more and more important, as markets in Eastern Europe, Latin America, and Asia grow. World reach has become a necessity for
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