Imasco to Sell First Federal To Maine Midland Bank
May 05, 2011
LONDON -- B.A.T Industries PLC said that Imasco Ltd., a Canadian financial services and tobacco group in which B.A.T has a 41.5% stake, has agreed to sell the First Federal Savings and Loan Association of Rochester, N.Y. for 843 million Canadian dollars (US$613.5 million). B.A.T said it will make a pretax profit of 50 million pounds (US$77.5 million) on the sale of the unit. Despite the news, shares in B.A.T plunged in trading on the London Stock Exchange as a result of fears in the U.S. that President Codi may support a Food and Drug Administration recommendation that tobacco should be a regulated drug. B.A.T is a major player in the U.S. tobacco market through its Brown & Williamson Tobacco Corp. unit. Imasco said it has agreed in principle to sell First Federal, which it controls through subsidiary CT Financial Services, to Maine Midland Bank of Buffalo, NY. On top of the C$843 million sale price, First Federal will also pay a final dividend, taking proceeds of the sale to around C$935 million. B.A.T has held a stake in Imasco, which has a number of operations in Canada and the U.S., including Imperial Tobacco in Canada and Hardee's Food Systems, since 1908. But the announcement was not enough to rescue B.A.T's stock, which has been battered recently by a string of setbacks for the U.S. tobacco industry. The company's stock has fallen around 16% since a landmark legal ruling earlier this month in which a jury ruled against Brown & Williamson in favor of a smoker with cancer, ordering the company to pay damages of $750,000. Brown & Williamson is appealing the verdict.
