Another twist in Altadis takeover

Altadis, the Spanish cigarette maker that CVC, PAI and Cinven are stalking, has reportedly met with Imperial Tobacco to re-think a takeover by the UK trade buyer.

The chances of Spanish cigarette company Altadis falling into private equity hands have been threatened as it emerged that the business has met with Imperial Tobacco to re-think the prospect of a trade sale. Gareth Davis, chief executive of Imperial, has expressed optimism about the potential merger of the two cigarette companies, according to Reuters and Bloomberg.

European buyout firms CVC Capital Partners and PAI Partners are reported to be stalking Madrid-based Altadis. Rival European buyout house Cinven, which had considered joining the private equity consortium, is now thought to be preparing a bid with British American Tobacco, the world’s second biggest cigarette maker.

Should Imperial win the battle for Altadis, it would be a particular knock for CVC, which recently lost out in the auction for UK supermarket chain Sainsbury’s.

Altadis, which makes Gauloises and Fortuna cigarettes, rejected Imperial’s two original bids of €45 per share and €47 per share in March and April. Imperial, the maker of Davidoff and Lambert & Butler cigarettes, is seeking to consolidate its position as the world’s fourth biggest cigarette maker with the potential takeover.

Cigarette makers have been merging in order to cut costs and speed up expansion in emerging markets. Consumer demand in developed markets has diminished because of increased taxes, advertising censorship and smoking bans.