Imperial Tobacco plans to sell stake in European logistics business Logista
16 Jul 2015
UK-based Imperial Tobacco Group plans to sell an additional stake in its European logistics business Logista Bloomberg yesterday reported, citing sources.
The Britain-based tobacco group, which owns about 70 per cent of Logista, may either reduce its stake to over 50 per cent, and sell it to institutions or may seek a buyer for the entire stake, the report said.
Imperial Tobacco gained control of Logista, which distributes products for Imperial and other tobacco makers in southern Europe, with its acquisition of Franco-Spanish business Altadis.
Logista services companies in the consumer goods sector, telecom operators, pharmaceutical companies and publishing houses. These goods are distributed to about 300,000 "delivery points" including shops, petrol stations, pharmacies and hospitals, hotels and restaurants.
Logista, which, according to Chicago-based investment research and investment management firm Morningstar, estimates could be valued in the share sale at about £1.1 billion, generates a low single-digit operating margin, as against the tobacco business, which delivers a margin over 40 per cent even with its revenue falling amid increasing regulation and fewer smokers.
An IPO would see Imperial pay off part of its £11.1 billion of net debt, giving room to participate in deals that might become necessary in the event Reynolds American Inc were to bid for Lorillard Inc, according to Erik Bloomquist, an analyst at Berenberg Bank in London.
The company had last year floated a portion of Logista on the Spanish stock exchange and raised £395 million to pay down debt
In April Reuters reported Imperial Tobacco is closing cigarette factories in England and France with around 900 job losses as it struggles with declining European sales (See: Imperial Tobacco is closing cigarette factories in UK, France).
Logista is the fifth company to announce share sales plans this year in Spain as the economy of the country emerged from three years of economic contraction.