Strong day for London but not Imperial Tobacco

Source from:  By Neil Hume and Robert Orr January 29 2008 01/31/2008

On a strong day for the London market, Imperial Tobacco lagged behind. Shares in the maker of Lambert & Butler cigarettes eased 0.2 per cent to ￡23.65 as investors switched into rival British American Tobacco, up 1.8 per cent to ￡17.73. That move was prompted by Citigroup, which criticised Imperial's decision, announced last Friday, to launch a bid for control of Logista. Imperial owns 60 per cent of Logista as a result of its ￡8.8bn acquisition of Franco-Spanish tobacco group Altadis. "First, it will mean the rights issue required to purchase Altadis will be ￡200m bigger and second, at least for now, about 8 per cent of Imperial's earnings will be derived from logistics, which we regard as inferior quality business to tobacco," analyst Adam Spielman said. Mr Spielman said there were other reasons why investors should favour BAT over Imperial, including valuation, increased competition from Philip Morris International and the fact that BAT is the price leader in most of its main markets. In t