Tobacco Revamp Proposals Deflate Imperial

Source from:  By Neil Hume and Bryce Elder June 2 2008 06/03/2008

The prospect of plain packaging for cigarette packs led to Imperial Tobacco underperforming a weak London market on Monday, On Friday, the Department of Health launched a consultation paper on tobacco restrictions in the UK. It contained proposals including the banning of cigarette vending machines and stripping tobacco packaging of all logos and differentiating colour. Analysts said a move to plain packaging had no precedent and was potentially serious for Imperial, which makes a quarter of its profits in the UK from brands such as Lambert & Butler. Citigroup said there was a 50 per cent chance the proposals, which would reduce the pricing power of cigarette brands, could become law by 2010. Imperial – in the process of raising £5bn via a deeply discounted rights issue – closed 2.7 per cent lower at £19.70. Its nil paid shares, which carry the right to buy one new share at £14.75, fell 6.2 per cent to 469p. In the wider market, leading shares closed lower due to further weakness in the banking sector after mortgage lender Bradford & Bingley, down 24.1 per cent to a record low of 67p, issued a severe profits warning and restructured its rights issue. The FTSE 100 ended 45.9 points, or 0.8 per cent, weaker at 6,007.6, taking losses since the market's peak on May 19 to 367 points, or 6.1 per cent. The FTSE 250 lost 121 points, or 1.2 per cent, to 9,928.3. HBOS was the biggest faller in the FTSE 100, even though it rushed out a reassuring statement after the news from Bradford & Bingley. Its shares lost 10 per cent to 360p. Traders said HBOS had been hit hard because it is the UK's second biggest buy-to-let mortgage lender. Alliance & Leicester shed 5.2 per cent to 403p, while Barclays eased 2.5 per cent to 365½p and Lloyds TSB slipped 1.8 per cent to 377¼p. The profits warning from B&B also unsettled the house-building sector. Barratt Developments, which is widely considered as needing a rights issue, was worst affected, falling 8.2 per cent to 167½p. Persimmon, off 3 per cent at 467¼p, was also under pressure, as was Tayl