Imperial Tobacco Will Offer to Buy Rest of Logista

Source from:  By Thomas Mulier Jan. 25 (Bloomberg) 01/28/2008

Imperial Tobacco Group Plc plans to pay 910 million euros ($1.3 billion) for the shares it doesn't own in Compania de Distribucion Integral Logista SA, Spain's largest cigarette distributor, after a takeover gave it a majority stake. Imperial, Europe's second-biggest publicly traded cigarette maker, inherited its 59.6 percent stake in Logista after gaining control of Altadis SA in a 12.6 billion-euro bid. Chief Executive Officer Gareth Davis said it's buying Madrid-based Logista because it would be too hard to find a private-equity bidder during a three-month deadline imposed by regulators. Imperial rose the most in more than a year in London trading, after saying that a stock sale to finance the purchase will be smaller than it anticipated. The U.K. company will bid 52.50 euros a share, 5 percent above yesterday's closing price for Logista, which ships goods from magazines to pharmaceuticals to retailers throughout southern Europe. Eduardo Coelho, an analyst at Banco BPI SA, urged investors to reject the bid as insufficient. ``This price does not reflect Logista's value,'' Coelho, who advises buying the stock, wrote in a note. ``This happened due to the lack of interest from other potential bidders, namely private equity, due to the current turmoil in credit markets.'' Investor demand for the loans that leveraged buyout firms use to pay for acquisitions dried up in August as the collapse of U.S. subprime mortgages led financing costs to more than double. Banks are cutting a $350 billion backlog of debt they agreed to provide, making them less willing to back new buyouts. Surpassing Bid Price Logista topped Imperial's bid price in Madrid trading, and rose 2.70 euros, or 5.4 percent, to 52.70 euros. Spanish market rules had obliged Bristol, England-based Imperial to either offer to buy the rest of the distributor or cut its stake to less than 30 percent during a three-month period starting from today. Imperial would consider scrapping the bid if it were to get a higher offer for its own stake in Logista, Davis said on a conference call. He said the company made the offer because the three-month limit was a ``short time'' to sell the holding. ``Private-equity buying is probably over,'' said Vangelis Bratsikas, who helps oversee about 120 billion Swiss francs ($109 billion) of assets as a fund manager at Clariden Bank in Zurich, including Imperial shares. ``They have huge problems financing these deals now.'' Rights Offer, Tekel Imperial, the maker of Davidoff cigarettes, rose 202 pence, or 9.1 percent, to 2,430 pence in London, the biggest gain since Dec. 7, 2006. That cut the shares' drop this year to 10 percent. A sale of stock to Imperial investors to help fund the Altadis takeover will total no more than 5 billion pounds ($9.9 billion), less than the company had said it might raise. Other bidders for the stake indicated interest in recent months, though they made no binding offers, Davis said. He also said Imperial may offer to buy Turkish cigarette maker Tekel, which the country's government is attempting to sell for a third time. Logista transports cigarettes for Altadis, whose brands include Fortuna, as well as competitors including Altria Group Inc. Net income rose 2.8 percent to 79.6 million euros in 2007's first nine months. Logista is ``an excellent company in its own right, with good margins,'' Davis said on the call. Imperial, which took over Altadis after a four-month fight with buyout firm CVC Capital Partners Ltd., also said it owns 95.8 percent of the Spanish cigarette maker's stock. It will force remaining investors to sell their shares in a ``squeeze out'' offer by Feb. 21 and then end trading of the stock. Appointments Altadis Chairman Jean-Dominique Comolli has signaled that he will join Imperial's board as non-executive deputy chairman, the statement shows. CEO Antonio Vazquez has opted against accepting an appointment for personal reasons, though he will act as a consultant while Imperial adds Altadis, also the world's biggest cigar maker, to the rest of its activities. Imperial, which controls almost half of the U.K. cigarette market with brands including Lambert & Butler, is eager to expand in Turkey, Davis said. More than three-fifths of adult Turkish males smoke, compared with fewer than a third in the U.K., the World Health Organization's Tobacco Atlas shows. Imperial Tobacco's relationship with Aldeasa, an airport retailing joint venture Altadis has with Autogrill SpA, will ``develop over coming weeks,'' Davis said. Autogrill plans to buy Altadis's stake in Aldeasa, Il Messaggero said yesterday. Moody's Investors Service today cut Altadis's long-term debt rating one level to ``Baa3,'' and said it may reduce the rating further, to below investment grade. The action is because Imperial has a lower debt rating than Altadis, at ``Baa3,'' Moody's said, also cutting the short-term rating to ``Prime-3'' from ``Prime-2.'' To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net . Enditem