Three months after closing its $1.9-billion buyout of Commonwealth Brands, which enabled it to expand into the US market, Europe''s second-biggest cigarette maker, the UK-based Imperial Tobacco Group Plc, today announced its decision to acquire its Franco-Spanish rival Altadis, for €50 in cash per share.

The offer is an improvement from its previous proposal of €45 and €47 a share, rejected by Altadis, and 29-per cent higher than Altadis'' share price on the day prior to Imperial''s offer in March, this year, and values the transaction at €16.2 billion ($22.4 billion / Rs93,036.6 crore), including debt..

The price also matches a rival offer from Europe''s second-largest leveraged buyout firm, London-based CVC Capital Partners.

Altadis said it would back the Imperial offer in the absence of a higher offer from CVC. Imperial plans to finance this takeover, the European tobacco industry''s largest, by issuing new shares worth £5.4 billion.

Through the takeover, Imperial, that owns the Davidoff brand will gain the Gitanes and Gauloises brand of cigarettes that has achieved near-iconic status, and some of the world''s best-selling cigars like Montecristo and Don Diego, and strengthen the British company''s position as the world''s No.4 cigarette maker.

The Spanish company also owns the largest distributors of tobacco in its domestic market, Italy and Morocco, which imperial will get after the takeover.

Hit by smoking bans in Western Europe that have reduced consumption, cigarette makers are cutting costs through consolidation of rivals and closing tobacco factories.

Imperial Tobacco expects the acquisition to result in cost savings of about €300 million annually by the end of the second year and expects combining production, purchasing, sales and marketing expenses to drop by about €470 million.

Post acquisition, the UK company will invite Antonio Vazquez, chief executive officer, Altadis, as CEO of Imperial Tobacco''s cigar and logistics businesses.

In December 2006, Japan Tobacco Inc. agreed to pay £7.5 billion for Gallaher Group Plc.

Altadis was formed in 1999 with the merger of the former French and Spanish tobacco monopolies Seita and Tabacalera have historical origins. While Tabacalera, the former Spanish company, traces its roots to 1636, France''s Seita was created by Napoleon Bonaparte in 1810.

Imperial has Citigroup Inc., Lehman Brothers and Morgan Stanley as its advisors, Altadis has hired Merrill Lynch & Co., Credit Suisse Group, J P Morgan Chase & Co. and NM Rothschild.