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Tuesday, July 17, 2007

Altadis to be purchased by Imperial Tobacco

The Wall Street Journal just reported on its website that Altadis has agreed to be purchased by Imperial Tobacco.

This especially affects our European friends, where Imperial Tobacco will be a tobacco "giant with leading market shares in the U.K., France, Spain, Germany, &c...

Will this decrease the quality of tobaccos that just seemed to get a revival under new blenders? How do you suspect this will affect prices for tobacco in Europe and America?

The long drawn-out battle for Altadis marks perhaps the last big deal in a series of acquisitions consolidating the industry in Europe. As cigarette sales slowly decline and smokers in the major Western European markets kick the habit and younger generations avoid the products, multinational cigarette makers have bee buying one another to cut costs through economies of scale.

The author of the article seems to think it will decrease prices, if in fact, there are economies of scale still to be exploited in such a large industry.

Since Altadis also holds a 49% stake in JR Outlets (a big online seller of cigars, bigger still in North Carolina), what will this do for cigar retail, which is arguably far more sensitive to industry changes than pipes and pipe tobacco?

Let's hear your thoughts!

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