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Last Updated: Thursday, 15 March 2007, 17:24 GMT
Imperial may buy Gauloises firm
Imperial bought Commonwealth Brands for 974m last month
Imperial Tobacco has approached its Franco-Spanish rival Altadis about making an 11.5bn euros ($15.2bn; 7.8bn) cash offer for it.

Imperial is the world's fourth largest tobacco group, with brands such as West and Lambert & Butler, while Altadis owns the Gauloises and Fortuna brands.

Imperial says that the talks are at an early stage and there is no certainty that an offer will be made.

Altadis says that the offer is dependent on the approval of its board.

The approach comes after Japan Tobacco agreed to buy Silk Cut maker Gallaher for $19bn (9.6bn) in December.

Last month, Imperial Tobacco - which employs 14,500 staff in 130 countries - agreed to buy the US cigarette maker Commonwealth Brands for 974m.

Share jump

Boxes of Imperial tobacco brand Lambert & Butler

Over the past two years there has been speculation that Imperial may be planning a bid for Altadis.

Altadis said it would consider Imperial's approach in the "next few days".

Altadis is Europe's third-largest cigarette maker and employs more than 27,000 staff.

News of the bid sent shares in Imperial Tobacco up more than 8% on the London stock market, closing up 175 pence at 2222p.

Altadis shares jumped nearly 20% in Madrid.

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