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Last Updated: Wednesday, 18 July 2007, 08:34 GMT 09:34 UK
Altadis agrees to Imperial offer
Worker at Altadis cigarette factory
Altadis rebuffed Imperial's 8bn takeover attempt in April
Britain's Imperial Tobacco has agreed to buy Franco-Spanish rival Altadis for 16.2bn euros ($22.4bn; 11bn).

Imperial said on Wednesday it would pay 50 euros a share for Altadis - an increase from an earlier offer of 47 euros a share which had been rejected.

Altadis had also received a proposal from private equity firm CVC Capital Partners, also worth 50 euros a share.

But Altadis has now said it will back the Imperial deal, in the absence of a higher offer.

Lambert & Butler

The move will join together the world's fourth largest cigarette group, Imperial, and the fifth, Altadis.

The combined firm will close the gap with the world's top three groups: Altria, British American Tobacco and Japan Tobacco.

Imperial said the deal, which would create cost savings of 200m a year, would be partly funded by a new rights issue of up to 5.4bn.

"Imperial Tobacco and Altadis are a great strategic fit, which will consolidate our position as the world's fourth largest international tobacco company," said Imperial chief executive Gareth Davis in a statement.

Montecristo cigars

Speculation about an Imperial-Altadis deal emerged in December 2004, and on 14 March, 2007, Imperial made a cash indicative bid for Altadis at 45 euros a share, which was rejected.

In April, Imperial's improved bid of 47 euros a share - valuing Altadis at about 12bn euros ($16bn; 8.2bn) in all - was also rejected as too low.

Private equity groups CVC Capital Partners and PAI Partners made a 50 euro bid on 4 May. By the end of the month PAI had withdrawn and CVC said was to go ahead alone with the bid.

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