Imperial Tobacco has confirmed its purchase of Germany's Reemtsma in a €5.8 billion deal.
Imperial is taking control of the world's fourth-largest cigarette company, funding the purchase through new equity and debt. The combined group will become an aggressive competitor to the world's top three multinational players.
Imperial is buying 90.01 per cent of Reemtsma for €5.22 billion on a cash and debt-free basis. It also has an option for the remaining 9.99 per cent of the group, which will be held by some of the Tchibo family shareholders.
Imperial shares rose strongly on news of the deal with the stock up 5.6 per cent at 962p by 8.30 a.m., as analysts welcomed the move on a strategic and price basis.
The deal will combine Imperial with its Lambert & Butler, Embassy and Van Nelle hand-rolled tobacco brands together with Reemtsma, which sells Davidoff, West, Peter Stuyvesant and R1 cigarette brands, in a deal that will more than double Imperial's cigarette volumes to 200 billion cigarettes a year.
The new combination will be a new challenger to the world's top three multinational tobacco groups - US Marlboro maker Philip Morris, British American Tobacco and Japan Tobacco.
Chief executive Mr Gareth Davis said it was a transforming deal and that the two groups would be a good fit in terms of brands, products, strategy and geography.
"This is a truly transforming deal, which move us up into the top tier of the world tobacco industry. We see a bright future in the premier league of tobacco companies," he said.
