The Investment column: City warms to Imperial deal
Wednesday 08 April 1998
Yesterday the group continued its acquisition spree by announcing a pounds 362m purchase of Douwe Egberts' tobacco business, which will give it a dominant position in the hand rolling and pipe tobacco market.
The deal certainly makes sense. With Drum, Van Nelle and Amphora, Douwe has some of the best tobacco brands in the world.
Imperial is one of the most efficient tobacco groups in the business and it should be able to bring the 37 per cent margins the new business earns closer to the 50 per cent enjoyed at its existing tobacco operations.
Imperial also gets instant access to the continental European tobacco market. It should be able to produce significant growth in revenues by using Douwe's existing distribution network to increase international sales.
Overseas expansion is the key to future growth for the industry, given that the mature UK market is likely to continue its gradual decline.
The City warmed to the deal and Imperial's shares jumped 31p to 458p yesterday. The acquisition will have little effect on profits for the year to September as it will not be completed until the summer.
The real benefits will be seen in 1999, where analysts have upgraded earnings per share forecasts by 6-7 per cent, putting Imperial on a prospective p/e ratio of under 9.
Even though fears of tobacco litigation and a Government crackdown on smoking will continue to dog the shares, Imperial looks good value.
- 1 BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
- 2 Number of young homeless people in Britain is 'more than three times the official figures'
- 3 Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
- 4 The map showing the most dangerous tourist destinations in Europe, according to the Foreign Office
- 5 Swedish minister gives strongest case yet on why EU should stop turning away asylum seekers
BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
Isis propaganda video shows 25 Syrian soldiers executed by teenage militants in Palmyra
Number of young homeless people in Britain is 'more than three times the official figures'
Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
The map showing the most dangerous tourist destinations in Europe, according to the Foreign Office
More Britons believe that multiculturalism makes the country worse - not better, says poll
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...