Shares in British American Tobacco came under pressure yesterday after a court ordered Philip Morris, the largest US tobacco maker, to pay more than $3bn (£2.15bn) in damages.
BAT stock slipped 3 per cent to 525p, but analysts dismissed fears that the verdict in favour of a smoker who is dying of lung cancer threatened British tobacco companies. Of the three UK cigarette manufacturers, only BAT is exposed to US litigation suits, through its subsidiary Brown and Williamson.
Commenting on the dip in BAT stock, Jonathan Fell, an analyst at Merrill Lynch, said: "The price already discounts a large amount of litigation risk. Tobacco stocks trade on very low ratings."
Philip Morris has said it will challenge the verdict. Analysts expected that the sum, which included $5.54m in compensation and $3bn in punitive damages, to be reduced on appeal.
In November 1998, BAT was one of a group of US tobacco companies that paid more than $200bn in a settlement to reimburse all 50 US states for the billions of dollars spent under public-sector health schemes to treat sick smokers.
Shares in the two other UK tobacco companies slipped during the day in sympathy. Imperial fell 5p to 785p but Gallaher ended up 2p at 478.5p.Reuse content