Imperial Tobacco profit down, plans to raise $9.6B

The 12.6 billion euro purchase of Altadis ate into earnings at the British company, pushing net profit down to 233 million pounds ($455 million) in the six months ending March 31, compared to 421 million pounds in the same period a year earlier.

The weight of the acquisition was evident as its adjusted pretax profit rose 38 percent to 918 million pounds ($1.8 billion), stronger than analysts' forecasts. The adjusted pretax profit figure excludes costs of the Altadis deal.

Revenue also rose 38 percent to 8.06 billion pounds ($15.7 billion) from 5.85 billion pounds.

"We have had a great start to the year with a strong performance from our core operations and an encouraging initial contribution from Altadis," said Chief Executive Gareth Davis.

However, the strong results were overshadowed by the size of the rights issue, which came at the top end of expectations, and its deep discount.

It will issue one new share for every two existing shares at a price of 1,475 pence ($28.98) a share, representing a discount of 43.1 percent to Imperial Tobacco's closing price Monday of 2,618 pence ($51.42).

Imperial Tobacco shares fell 6.2 percent to 2,455 pence ($48.37) on Tuesday. The shares have increased around 16 percent from a year ago, as investors took cover in the relative safety of tobacco stocks amid a consumer downturn.

Keith Bowman, an analyst at Hargreaves Lansdown Securities, noted that Imperial has outperformed the FTSE-100 index by just under 24 percent over the past year.

"Furthermore, a rights issue tends to satisfy any short-term institutional buying appetite for the shares," he said.