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With merger, Imperial to control top Cuban cigar brands.

British Imperial Tobacco finally came up with the right price in its bid for the Franco-Spanish conglomerate Altadis: 16.2 billion euros ($22.3 billion). That works out to 50 euros ($69) per share.

The merger would make London-based Imperial the world's fourth-largest tobacco company, giving it ownership of popular Cuban cigar brands Montecristo, Cohiba, Partagas and Romeo y Julieta.

The Altadis administration council--led by Spain's Antonio Vazquez Romero and France's Jean-Dominique Comolli--has recommended to stockholders that they accept the offer and sell their shares. If nothing better comes up, the transaction should be completed by Sept. 30. Altadis advisers such as Credit Suisse and Merrill Lynch have agreed that this is the best offer so far.

Vazquez and Comolli would be incorporated as members of the new board, with Vazquez as CEO. Imperial seeks to control 80% of the capital.

The Cuban government--which owns Habanos SA in a 50-50 ventures with Altadis, hasn't made any comments, and no one knows how Cuba will react. Nor is it known how the government's relationship with Altadis will change under new ownership.

Imperial is very much aware how important Cuban cigars are to the Altadis venture, but it's also aware of Cuba's reluctance to associate itself with a British firm, which would be much more vulnerable to U.S. legal actions.

Gareth Davies, CEO of Imperial, said Jul. 18 that the proposed entry of Habanos into 50% British ownership would represent a "great addition" to Imperial's existing portfolio of cigarette brands, including Lambert & Butler, Superkings and Embassy.
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Date:Aug 1, 2007
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