CVC, PAI Altadis bid faces government opposition

CVC Capital Partners and PAI Partners’ bid for Altadis, the maker of Gauloise, Gitanes and Fortuna cigarettes, is reportedly experiencing difficulties in the face of opposition from the French and Spanish governments while the group remains split about the final structure of the bid.

European buyout firm CVC Capital Partners and PAI Partners’ €12.8 billion ($17.2 billion) bid for Spanish-French tobacco company Altadis has reportedly provoked a reaction from the Spanish and French governments.

The two governments are opposed to the private equity bid because it is likely to break up the company and cause job losses, according to Spanish newspaper El Economista.

The report also said the Spanish government is unhappy about the buyout groups’ failure to find a Spanish member for the group.

But a city source said: “This is quite surprising because the Spanish government has gone on record in the past that they would not interfere. El Economista has a sensationalist reputation and so there may be reason to doubt the story.”   

Additionally, the bid may be coming unstuck because of internal tensions. Reuters reported PAI and the other investors are unhappy with the bid’s structure, because CVC is taking a 40 percent stake, leaving PAI with 30 percent and other unnamed investors with 30 percent. A source close to the deal dismissed this.

The buyout firms face a rival bid from Imperial Tobacco, which is expected to equal the consortium’s €50 per share offer, according to media sources. But a banking source doubted the imminent arrival of this bid. 

Imperial has made two earlier bids for the company, one at $47 per share in April. On the strength of this offer Imperial has limited access to Altadis’ books while the buyout firms have been granted full access.

The Spanish and French governments could not be immediately reached for comment.