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Buyer approaches Silk Cut maker Gallaher shares climb on bid talk
(about 6 hours later)
Gallaher, the maker of Silk Cut and Benson & Hedges cigarettes, has been approached by a potential buyer. Shares in Gallaher, the maker of Silk Cut and Benson & Hedges cigarettes, have risen by 20% in London after it was approached by a potential buyer.
Takeover rumours have been swirling around the company for a while, and its share price has climbed as a result, prompting the firm to make a statement. In early trading, the firm was the biggest gainer on the FTSE-100 index.
But Gallaher said the approach was preliminary and there was no guarantee a bid would follow. Gallaher declined to name the suitor, saying the approach was preliminary and there was no guarantee of a firm bid.
Analysts said there were only a handful of tobacco companies that could afford to bid for Gallaher. But shares in Japan Tobacco went up nearly 5% in Tokyo after Reuters news agency quoted sources identifying it as the most likely firm behind the move.
Reuters quoted an unidentified source close to the situation as saying the most likely bidder was Japan Tobacco. Gallaher's share price climbed to £11.75 by 0815 GMT, valuing the company at £7.7bn.
The world's other biggest cigarette firms are Altria and British American Tobacco (BAT).
There can be no assurance that any offer will be made Gallaher Check Gallaher's sharesThere can be no assurance that any offer will be made Gallaher Check Gallaher's shares
Tobacco companies are facing a squeeze in many European markets because consumers are turning away from smoking as governments and the European Union look to improve people's health.Tobacco companies are facing a squeeze in many European markets because consumers are turning away from smoking as governments and the European Union look to improve people's health.
Gallaher, like many of its rivals, has been looking to emerging markets to offset a decline in demand.Gallaher, like many of its rivals, has been looking to emerging markets to offset a decline in demand.
Shares in Gallaher closed 0.8% lower at 979 pence on Wednesday, after jumping 3.1% in the previous session.
A Gallaher spokesman said: "The approach is preliminary and there can be no assurance that any offer will be made."A Gallaher spokesman said: "The approach is preliminary and there can be no assurance that any offer will be made."