To know the difference between cigarette and cigar
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International:
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Source:Vedomosti,2007-07-25
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Direct investments foundations that plan to purchase Altadis, French-Spanish tobacco company consider, that the best suggestion would be to split it. That would allow them to get an advantage at the face of Imperial Tobacco company, which also wishes to buy it. It hadn’t yet refused to purchase it.
Imperial has offered to buy Altadis for 11. 5 billion euro in the middle of March, but this proposal had been rejected. Several European direct investments foundations, such as CVC Capital and Cinven had tried their luck recently. It was they, who offered a deal, which would allow to benefit for all participants.
In order to get as much profit from this sale as possible Altadis is to be split into three parts. The first one is production of cigarettes (Gauloises and Gitanes are the most famous cigarette trademarks), which is of greatest interest to Imperial Tobacco.
Foundations in their turn are more interested in two other business directions: production of Cuban cigars (Montecristo, Cohiba and Romeo y Julieta are the most famous cigar trademarks) and control stock of the company, which is distributing tobacco products and medicines.
Suggestion of foundations is not difficult to explain. They do not like to invest into tobacco companies, willing to keep their good reputation. In this particular case, separation of cigarette department would allow to evade this problem. Citigroup analysts think that if foundations would manage to buy Altadis, they would be able to sell this department to BAT or Japan Tobacco, for example. Other experts assume that foundations are at the first hand interested in getting access to profitable distribution business of Altadis, which is one third of its gain. Cigar production brings only one fifth of sales and profit, but still it is of certain financial interest. Cigars are sold mostly on the markets of developed countries, but they are on the way to China and India. And if the USA will cancel Cuban cigars embargo, Altadis will get the most of it. In this case this business would attract attention of LVMH or Richemont companies, which are famous for production of luxurious goods.
But trade unions may become an obstacle on the way of foundations that may wish to buy the company, ‘cause they may not agree with the idea of Altadis splitting after purchasing. They would prefer the deal, when cigarette business would be first sold to other market participant, such as Imperial or BAT. According to official sources board of directors and management of the company share this very point of view. Some analysts think, that if this attempt of foundations regarding purchasing of Altais will fail, Imperial’s two only competitors for buying it would be BAT and Altria. They both operate quite successfully on the markets, which they share with Altadis. For instance, Altria’s share on Spanish market is 40%, and Altadis’s — 25%. In France this ratio is 40% to 18%. That is why Altria’s proposal will most probably face protests from the side of anti-monopoly organizations.
BAT, in its turn, may refuse to purchase Altadis, ‘cause the price is too high. Analysts bet, that Imperial Tobacco will be able to afford the price and buy Altadis. Garret Davis, Imperial’s chief director has declared last week, that he will continue negotiations with company’s board of directors. He had also added, that if this deal will take place, Imperial will separate several of Altadis’s departments. French-Spanish company has been working in Russia since August 2004, when it had purchased “Balkanskaya zvezda” tobacco factory in Yaroslavl (WSJ data).
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Source: http://www.hindustantimes.com/,2010-09-07 |
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What do you get when local legislators can't get anything meaningful done but really want to show the folks at home they are working hard?
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