Japanese smoke signals push up Imperial

The maker of Gauloises and Davidoff cigarettes has long been mooted as a potential target to be taken out, with a combination of British American Tobacco and Japan Tobacco regarded as a possible suitor.

Imperial Tobacco

Imperial Tobacco Group PLC

Nomura analysts had urged investors to hold their horses over a possible deal, suggesting in November that it might be at least a year before the cigarette maker receives an approach, given uncertainty over when the Japanese government will sell its stake in Japan Tobacco.

But yesterday, analysts suggested that the upcoming resolution of the government stake sale means that Imperial’s prospects of being taken over are set to increasingly be a focus for the market.

Nomura previously thought that any deal could be delayed until the end of this year or into 2013. But with budgetary changes in Japan compelling the government to sell part of its 50pc stake in Japan Tobacco from April, Nomura thinks this will give the company more freedom over its business decisions. “We now see Japan Tobacco as potentially more confident to enact any plans in terms of major developments of its international presence,” said analysts, who upped their rating on Imperial to “neutral” from “reduce”.

That helped Imperial edge ahead as M&A murmurings also hauled the heavyweight miners higher. Xstrata soared 111p to £12.30½ as the mining business said it was in talks with commodities trader Glencore International about an all-share deal that could create a combined group worth more than £50bn. Glencore, which put on 29.95 to 461.7p, already owns a 34pc stake in Xstrata and a tie-up between the pair has long been mooted. Their planned marriage heartened other miners, with Vedanta Resources rising 72p to £13.23 and Antofagasta putting on 36p to £13.66.

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