Imperial's Altadis Timetable Slips

Source from:  ft.com By Maggie Urry October 30 2007 10/31/2007

The timetable for Imperial Tobacco's acquisition of Altadis, the Spanish maker of Gauloises and Gitanes cigarettes, has slipped and the deal is not now expected to be completed until January next year. Previously Imperial had expected to take control of Altadis by the end of this calendar year. Gareth Davis, chief executive of Imperial, said on Tuesday that new takeover rules in Spain had delayed the process of approval by regulators. However, he was confident the approval was now "pretty imminent". After that Altadis shareholders would have to vote on the takeover. He said that while the delay was frustrating, it would have no financial impact on the group as it had put the financing in place in July, when it launched its €12.6bn (£8.8bn) bid for Altadis, before the recent debt market turmoil. Imperial has a £9.2bn bank facility in place to fund the purchase. The financing included a £5.4bn equity bridge facility which will be repaid from a rights issue due to take place by July 18 next year. Mr Davis was speaking after announcing a 5.9 per cent increase in group pre-tax profits for the year to September 30 to £1.237bn, much in line with forecasts of around £1.25bn. The results were a record and reflected "another excellent year," Mr Davis said, with the Davidoff, West and JPS brands performing well. However, the figures included a good performance in the UK, the inclusion for the first time of Commonwealth Brands, the US business bought in April, and higher profits from the around the world. However, profits fell in Germany and were only slightly higher in the rest of western Europe. The UK business, where Imperial has the leading brand Lambert & Butler, shrugged off the effect of smoking bans, increasing adjusted operating profits by 11.5 per cent to £564m. Mr Davis said there had been a slightly worse than anticipated drop in smoking in England as the ban came as poor summer weather deterred smokers from going outdoors. By the September year-end cigarette volumes were running around 4 per cent down in England, he said, and were expected to recover to show a fall of about 2 per cent from the bans. In Germany tax changes disrupted the market, cutting adjusted operating profits by 11.9 per cent to £238m, but Mr Davis said: "I think we're over the worst. I see the profit outlook improving over time." Profits benefited from the inclusion for six months of Commonwealth Brands, bought for £970m in April. The contribution to operating profits from the US jumped from £4m to £52m. Mr Davis said plans were in place to introduce the group's brands into the US market. Elsewhere in the world, adjusted operating profits rose 17.1 per cent to £295m, with good performances from less developed markets. Net revenue, after duty, rose 4 per cent to £3.28bn. Mr Davis said the results were a record, with cigarette sales volumes up 7 per cent. Underlying growth, excluding acquisitions, was about 3 per cent, he said. Group operating profits rose 8 per cent to £1.418bn, or by 9 per cent on an adjusted basis to £1.475bn. Adjusting earnings per share rose 12 per cent to 136.7p, and a final dividend of 48.5p gives a total of 69.5p, up 12 per cent. Profits were hit by a rise in interest charges from £188m to £237m, as the group's debt increased from £3.9bn to £4.9bn over the year, and by a £34m "mark-to-market" loss on derivative financial instruments. In opening trading the shares fell 2.1 per cent or 51p to £23.92. Enditem