30 October 2015 by lberuti
When BATSLN ( Britisn American Tobacco Plc ) published their results yesterday, It left both their stock and their 5 year risk premium largely unaffected. In the eyes of investors, increasing volume made up for a negative currency impact which explained the 6.5% revenue fall. But today, BATSLN’s 5 year CDS was pushed 7bps wider at 42bps by growing speculations that they could be mulling a bid for IMTLN ( Imperial Tobacco Group Plc ). A press article reported that the company had been working with a couple of banks on a “break-up bid for IMTLN that would value the third biggest tobacco group at GBP48bln. Regulatory hurdles in order to comply with stringent competition commission rules will not be easily cleared though. That was reflected in the price action of IMTLN’s 5 year CDS which, after an early 10bps tightening, closed only 2bps tighter at 80bps.