Jump to full article: Bloomberg News, 2007-02-08
Author: Thomas Mulier
Intro: Imperial Tobacco Group Plc, the U.K. maker of Lambert & Butler, agreed to buy Commonwealth Brands for $1.9 billion to enter the U.S. discount cigarette market.
The purchase of Bowling Green, Kentucky-based Commonwealth from closely-held Houchens Industries Inc. adds five brands including USA Gold and Sonoma, Imperial Chief Executive Officer Gareth Davis said on a conference call today.
The fourth-largest U.S. cigarette maker gives Bristol, England-based Imperial 3.7 percent of the world's most profitable market. Smoking in Britain will decline this year because of a ban. Commonwealth's brands have gained a 13 percent share of the U.S. discount market since the company was created in 1993, and haven't been named in any smoker lawsuits.
``Whenever you do go into this market, you are taking on legal risk,'' said Stuart Fraser, who helps manage the equivalent of about $39 billion pounds at Brewin Dolphin Securities Ltd. in London. ``It does look though that things are quieting down a lot and the political scene has stabilized.''
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