PAI drops Altadis bid

PAI Partners has abandoned its joint bid with CVC Capital Partners for Spanish cigarette company Altadis. An insider said the split had been amicable in the face of opposition from the French and Spanish governments.

European buyout firm CVC Capital Partners is leading the charge for Altadis, the maker of Gauloises, Gitanes and Fortuna cigarettes, after PAI Partners withdrew from the consortium.

A banking source said: “PAI has left the consortium because of the opposition to the consortium from the Spanish and French governments and not due to any tension between the two firms”.

El Economista reported yesterday that the bid was experiencing opposition from the Spanish and French governments because of fears the firms would split up the company and cause job losses.    

The latest development may mean CVC will join up with other unnamed French and Spanish investors, who were considering taking a 30 percent stake in the bid according to Reuters earlier this week. It is also considering making a solo bid according to the UK newspaper Financial Times

Reuters said last week PAI and the unnamed investors were unhappy with the structure of the bid, which would have seen CVC take 40 percent and PAI take 30 percent. The banking source dismissed this.

CVC also faces a rival bid from Imperial Tobacco, which is expected to be a €50 per share ($67 per share) offer, according to media sources. But another banking source doubted the imminent arrival of this bid. 

The FT said Altadis managers prefer a move to private equity or a management buyout because they would be able to keep their jobs.  

Imperial has made two earlier bids for the company one at $47 per share in April. On the strength of this offer Imperial has limited access to Altadis’ books while CVC has full access to the books because of its €50 per share offer originally made with PAI.