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Imperial Tobacco Agrees to Acquire Altadis for $22.4 Billion

David Savona
Posted: July 18, 2007

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The Altadis cigar business has two segments, Cuban and non-Cuban. The ownership of half of Habanos gives Altadis unparalleled rights to Cuba's renowned brand names in every market save for the United States. In addition, via its Fort Lauderdale, Florida, subsidiary Altadis U.S.A. Inc., the company makes the non-Cuban versions of many of those brands for sale in the lucrative U.S. cigar market. Altadis U.S.A. also has a considerable machine-made cigar business, with major brands including Backwoods.

Davis called the U.S. market "highly profitable" and said Altadis is ranked No. 1 in the U.S. cigar market "in sales volumes, revenues and profitability."

Change is inevitable with acquisitions, and when executives speak of synergy, that often means redundancy, and areas that can be eliminated for cost savings. Imperial says it will dispose of some non-core Altadis assets valued at 650 million euros ($897 million), including property and some of the company's logistics business.

While the corporate headquarters will be relocated to Bristol, England, where Imperial is located, the Altadis cigar business will stay in Madrid, Spain. "The cigar business has historically been headquartered in Madrid, it's where all the expertise is…I think it would be very destructive to move it from Madrid," said Davis. He also said Altadis CEO Antonio Vazquez will become CEO of the enlarged group's cigar and logistics business, and that Vazquez and Altadis chairman Jean-Dominique Comolli have been invited to join Imperial's board.

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