A BATTLE is set to erupt between British American Tobacco and some of its international rivals in the auction of a controlling stake in Egypt’s state-owned cigarettes firm.

The British company has asked its financial adviser, HSBC Investment Banking, to draw up a potential bid valuing the Egyptian company at more than $500m (£290m).

Imperial Tobacco, BAT’s smaller rival, is also interested in bidding for the 52% stake, as are international competitors Altria, the owner of Philip Morris, and the Franco-Spanish firm Altadis.

BAT and Imperial declined to comment this weekend about their plans in Egypt.

However, news of the firms’ interest comes during a frenetic end to the year for mergers and acquisitions (M&A) activity involving British companies.

Tomorrow, Reg Vardy, the UK’s second-largest motor dealership, is expected to announce an agreed takeover by its larger rival, Pendragon, despite the intervention of two would-be counterbidders.

The deal is expected to be worth about 800p-a-share, an increase of 50p-a-share from Pendragon’s initial approach.

Lookers, the smaller quoted car dealership, and members of Reg Vardy’s management team backed by Goldman Sachs Capital Partners, are understood to be the rival bidders. It remains a possibility that another party could trump the Pendragon offer, although insiders say this is unlikely.

Elsewhere, Pilkington, the glass manufacturer, is bracing itself for a renewed approach from Japanese rival and major shareholder Nippon Sheet Glass (NSG).

Although NSG was rebuffed with an initial 150p-a-share offer last month, which the Pilkington board said “fell materially short of a level we can recommend”, sources close to the situation say that an improved offer is likely to be lower than the 162p reported in recent weeks.

John Laing, the builder, has also received a takeover approach, understood to be from an overseas rival.

Analysts speculated on Friday that the predator could be either of the Spanish companies Acciona or Ferrovial.

The building sector has seen a number of other deals in recent weeks, with Persimmon buying fellow housebuilder Westbury for £643m and Mowlem admitting to an approach from Carillion.

M&A bankers expect the deal frenzy to continue across all major industry sectors well into next year, fuelled partly by the availability of cheap debt.

The wall of money raised by private-equity firms has also raised speculation that the first takeover of a FTSE-100 company by venture capitalists may be just around the corner.