Word of the Liggett move was especially discouraging for BAT, whose Brown & Williamson subsidiary in the US is in the front lines of the industry's legal and political troubles. Shares of BAT dropped yesterday by 13p to 472.5p, while Imperial's price fell 7p to 377p.
Lawyers for Liggett, which is headed by Bennett LeBow, are said to be ready to assist 11 states in lawsuits filed against the industry aimed at recovering state funds spent on treating smoking-related diseases. Last year, Liggett settled with five other states that had started legal proceedings.
It is a chilling prospect for the other tobacco companies. Most intriguingly, Liggett is believed to be ready to surrender handwritten notes taken by its own lawyers over three decades of closed-door meetings at which all the tobacco companies allegedly set strategy to avoid prosecution. "This is the plum," one tobacco source said.
R J Reynolds was dismissive of the Liggett manoeuvre, which it termed a "PR ploy" and a case of "another illusory `settlement' in the making".