Altadis is set to open its books next week to two private equity groups after they issued a joint €12.8 billion (£8.7 billion) takeover approach for the Franco-Spanish cigarette company yesterday.

The conditional €50 per share offer from CVC Capital Partners and PAI Partners threw down the gauntlet to Britain’s Imperial Tobacco, whose own revised bid for Altadis at €47 per share was rejected by the company’s board last week. The board of Altadis, maker of Gauloises cigarettes and Cohiba cigars, is expected to reconvene on Monday to assess the latest approach, but it is believed that it will support it in principle.

If accepted, the approach could trigger an auction for the world’s fifth-largest tobacco company between the private equity firms and Imperial, the number four. A recommendation could force Altadis to open its books to both parties.

Altadis said the new bid was dependent on gaining access to its books, a recommendation from its board and acceptances from 75 per cent of investors, as well as raising debt financing.

BACKGROUND

• Imperial gets fired up over Altadis bid

• Imperial snubbed as Altadis opens books

• Imperial’s investors back bigger rights issue

• Imperial Tobacco bids £7.6 billion for Altadis

• New laws could stub out Imperial’s US hopes

Davis launches great tobacco merger

An Imperial-Altadis deal is logical. The company wants Altadis’s stable of brands, ranging from Gauloises Blondes to Cohiba and Montecristo

Related Internet Links

• Imperial Tobacco company information

• Imperial Tobacco share price chart

• Imperial Tobacco forecast

Gareth Davis, the chief executive of Bristol-based Imperial, was locked in meetings with investors yesterday and declined to comment. The company and its advisers are planning to consider their positions over the weekend.

However, the approach provoked fresh accusations that Altadis may have leaked confidential financial data to CVC and PAI in order to kickstart an auction. Altadis denied the suggestion yesterday.

At Imperial’s results on Tuesday Mr Davis said that he remained concerned about the need to maintain “a level playing field” with potential rival bidders.

Imperial, owner of Lambert & Butler, is now expected to reiterate its demands for access to the Altadis accounts.

“There is now no reason why [Altadis] cannot share anything and everything,” said one source close to the group. “If [Imperial] can get under the hood it’s possible they could go higher.”

Mr Davis, who met with senior Altadis management in Madrid on Monday, has also raised the possibility that Imperial might walk away.

“This is an important deal . . . but there are other opportunities out there. We won’t be around forever,” he said on Tuesday.

Altadis was formed in 1999 through the merger of France’s Seita and Spain’s Tabacalera, and employs more than 27,000 people. Analysts say a succesful bid from private equity would be likely to lead to extensive cost cuts and possibly a partial break-up of its three main divisions: cigarettes, cigars and logistics.

CVC manages more than $13 billion (£6.5 billion) in funds and has been involved with companies including Kwik-Fit, AA, Debenhams and Halfords. French group PAI manages funds totalling more than €7 billion (£4.8 billion). It recently bought out United Biscuits with The Blackstone Group.

Altadis could be the last act consolidation before regulators block further tobacco deals.

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