BAT shares fall after US court award
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Your support makes all the difference.SHARES IN British American Tobacco, the world's second largest tobacco company, fell by almost 5 per cent yesterday following the decision by a US jury in Oregon to award a record $81m in damages against its larger rival, Philip Morris.
BAT shares closed 24.5p lower at 516p as the UK market reacted to the US decision made late on Tuesday. It was also disclosed yesterday that the competition authority in Australia has raised objections to the group's proposed pounds 5.2bn merger with Rothmans International. The deal would give the combined group 62 per cent of the Australian cigarette market and over 90 per cent of its premium cigarette sector.
BAT, whose brands include Lucky Strike and State Express 555, said it was too early to judge the longer-term significance of the Oregon judgement, which concerned the death of 67-year-old former janitor who had smoked for 42 years. The company said it would wait to see if the ruling was overturned at appeal. "Until you see what happens at appeal you don't know if you are seeing a new wave of litigation," a BAT spokesman said.
Some analysts said the Oregon judgment could encourage more suits following a $51m damages award in San Francisco in February. Jonathan Fell at Merrill Lynch said the litigation picture is "still developing." He added: "It is certainly worrying but I wouldn't say it is the end of the world."
Separately BAT said it had anticipated some regulatory problems as a result of its proposed merger with Rothmans. It expects to sell some brands in Australia to satisfy the authorities. However it expects to escape disposals in South Africa, where its share will be more than 90 per cent.
Other markets where objections are likely to be raised by the authorities include New Zealand, while in Canada BAT is expected to sell the Rothmans business there to achieve clearance.
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