Imperial Tobacco rolls out pounds 185m offer for Rizla
Wednesday 29 January 1997
The deal, the group's first since being demerged from the Hanson conglomerate in October, will strengthen Imperial's position in the handrolling market, where Golden Virginia already commands 60 per cent of legitimate tobacco sales.
Since 1993 and the opening up of the single European market, handrolling has become one of the most dynamic parts of the UK tobacco industry as illegal importers have exploited much lower duty rates on the Continent. Around 60 per cent of the UK market is believed to be supplied by product smuggled in from the Continent, including re-exported British brands such as Golden Virginia and Gallaher's Old Holborn. With a 50-gram tin of handrolling tobacco selling for around pounds 2 in Belgium, the cost is roughly a quarter of the level in the domestic market.
That has helped boost the UK market for handrolling tobacco, which has been growing at around 7 to 8 per cent a year since 1993, against a 2.5 per cent per annum fall in sales of factory-made cigarettes.
Imperial beat off several other interested parties to capture Rizla, based in Breda in Holland, but founded in France in 1796. It was acquired in 1994 by a group of institutional and trade investors led by UBS, the Swiss bank.
Gareth Davis, Imperial chief executive, said they had been eyeing the group for around five years, but serious negotiations only started two months ago after they were "made aware" it was for sale. "Rizla is a company we have watched with great interest for quite some time, but last year we were totally absorbed by the demerger process," he commented.
There was "significant potential" to increase productivity and profitability of the business, which has seen trading profits rise from pounds 17m on sales of pounds 65m to pounds 23m on a turnover of pounds 74m in the three years to December. The deal would be earnings-enhancing in the first year, he said.
There were also significant opportunities for synergies. Both Rizla's papers and Golden Virginia are sold through similar outlets in the UK, offering the chance for savings on distribution costs. Rizla, which claims two-thirds of the world market for handrolling tobacco papers, also widened Imperial's presence in Europe.
- 1 Liam Gallagher brands Kanye West 'utter s**t' during BRIT Awards performance
- 2 Isis burns thousands of books and rare manuscripts from Mosul's libraries
- 3 People who sleep more than eight hours are more likely to have a stroke, research shows
- 5 New theory could prove how life began and disprove God
Ukraine crisis: Putin will cut gas to Europe unless Russia is paid by the end of the week
Liam Gallagher brands Kanye West 'utter s**t' during BRIT Awards performance
Isis burns thousands of books and rare manuscripts from Mosul's libraries
Mohammed Emwazi: Nine things we now know about man named as Isis militant 'Jihadi John'
Kanye West climbs on table at Nando's to crowd chants of 'Yeezus' before Brit Awards 2015 performance of 'All Day'
Oscars 2015: Birdman beats Boyhood as Eddie Redmayne and Patricia Arquette win big - as it happened
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
iJobs Money & Business
£17000 - £25000 per annum: Recruitment Genius: An opportunity to join this new...
£18000 - £21000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£36000 - £44000 per annum: Recruitment Genius: Encouraging more businesses to ...