Imperial Nears Logista Decision to Set Rights Size

Source from:  By David Jones LONDON, Jan 21 (Reuters) 01/23/2008

Imperial Tobacco (IMT.L: Quote, Profile, Research) is set to say if it will sell or buy up Altadis's majority-owned Logista unit this week and so determine the size of its rights issue to pay for the Franco-Spanish tobacco group, analysts said on Monday. The world's fourth-biggest cigarette maker is in the final days of sealing its 12.6 billion euro ($18.24 billion) cash deal to buy Altadis (ALT.MC: Quote, Profile, Research), the Gauloises and Fortuna cigarette maker, and now must state what it intends to do with the Madrid group's 1.3 billion euro stake in Logista (LOTA.MC: Quote, Profile, Research). Analysts say initial expectations were that Imperial would sell Altadis's 60 percent stake in the logistics subsidiary, but the stock market has became concerned it might buy out the minorities, which has put pressure on Imperial's share price. Analyst Jonathan Fell at Deutsche Bank says if Imperial does buy out the Logista minorities there would be a need for a rights issue of 5 billion pounds, while if it sold out of Logista the equity issue could fall to 3-3.5 billion pounds. Imperial shares dipped 2.8 percent to 24.27 pounds by 1330 GMT, and have fallen from 27.12 pounds since the start of 2008. "We think the market is concerned about the chance that Imperial will announce a minority buy-out of Logista, suggesting it might not be a seller, and therefore have to raise the maximum level of equity to part fund the Altadis deal of around 5.4 billion pounds," said analyst Charles Manso de Zuniga at Dresdner Kleinwort. Back in July, Imperial said it had set up an equity bridge facility of 5.4 billion pounds to cover funding until a rights issue is completed. This issue could be up to 5.4 billion pounds and be launched in the next 12 months, or by July 18, 2008. Under Spanish rules, Imperial will have three months once the acquisition is completed -- seen in the next few days -- to buy out the minority shareholders or sell down its shares in Logista to below 30 percent. The deal has already been cleared by regulators in Brussels and Madrid. The period for Altadis shareholders to accept Imperial's 50 euro a share cash offer closed on Friday, and the Spanish regulator the CNMV has 2-7 working days to announce the results, meaning it could report between Jan. 22 and Jan. 29. Analysts expect Imperial will get over 80 percent of acceptances, allowing the recommended bid to go unconditional, while Imperial has said it will give its intentions over Logista by the time this result is announced. Many analysts expected the CNMV to report by the end of this week, or Jan. 25, and so seal the biggest deal ever seen in the tobacco sector. Imperial will give an update on the deal when it gives its intention over Logista. The group had originally said it expected the deal to yield cost savings of around 300 million euros a year and be earnings enhancing in its first full year. ($1=.6907 Euro) (Reporting by David Jones, editing by Will Waterman) Enditem