Shares in tobacco company Gallaher Group rose to a new high today after it received a bid approach that sources said came from Japan Tobacco (JT).
Shares in Gallaher, the world's fifth-largest cigarette group that employs 1,100 people in the Republic, rose 18.9 per cent to £11.64 by earlier this morning, off a record high of £12.10.
Analysts expect a deal at up to £12 a share, with Merrill Lynch looking at a takeout value of £11.80, or a 21 per cent premium from the share price close on December 6th.
The talks between Gallaher and Japan Tobacco are at an early stage, sources said, but if the bid is agreed it would be Europe's largest tobacco deal, surpassing the $7.8 billion JT paid for the non-US tobacco business of RJR Nabisco in 1999.
A bid is likely to be in cash to attract Gallaher's largely European and US shareholders, and although a rival bid is unlikely the move may pressure Imperial Tobacco Group and French-Spanish tobacco Altadis to look at a merger.
Gallaher, the maker of cigarette brands such as Benson & Hedges, Silk Cut and Mayfair and long the subject of takeover rumours, released a statement last night that it had received an approach.