Kicking the habit

19 November 2007 By John Foley Follow @johnsfoley

The luxury empire may divest its E15bn stake in British American Tobacco. With demand for its trinkets on the ascent, Richemont doesn’t need to lean on BAT for earnings growth so long as the global addiction to luxury continues.

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Compagnie Financiere Richemont, the luxury group, may spin off its 19% stake in British American Tobacco. A further stake of 11%, owned by a vehicle of the Rupert family which controls Richemont, may also be spun off.

Richemont said the restructuring was a response to changes to its status as a Luxembourg 1929 holding company that will take effect in 2010. The European Commission has deemed such taxexempt structures anticompetitive.

Richemont acquired the stake in BAT in 1999 as partpayment for its Rothmans International tobacco business. At the time, BAT shares were worth around 540p. On Friday, they closed at 1818p, valuing the 30% stake at £11bn (E30bn).

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