Imperial Tobacco shares soared to a 10 year high on hopes that chief executive Gareth Davis’s mooted last big deal might be a bid for Imperial itself.

But they fell 2.5 per cent on today’s modest $1.9 billion acquisition of US discount cigarette maker Commonwealth Brands. Investors would have liked a deal with Altadis or a move into Turkey but predators will not be attracted by higher debt and the group’s first potential exposure to US anti-tobacco litigation.

Imperial is adamant that the legal risk in this case is minimal since Commonwealth is a newcomer, which started after the dangers of cigarettes were known, and is not named in any liability claims or class actions.

America is the world’s most profitable tobacco market but this buy, Imperial’s first in the US after cigarette-paper maker Robert Burton, is not the one the market was looking for.