By Thomas Mulier
June 2 (Bloomberg) -- Imperial Tobacco Group Plc, Europe's second-largest cigarette maker, fell in London trading after the U.K. government said it may bar tobacco companies from using brands and logos on cigarette packaging and limit shop displays of their products to curb smoking by children.
Imperial slid 55 pence, or 2.7 percent, to 1,970 pence, the stock's lowest price since March 17. The cigarette maker is trying to sell new shares worth 4.9 billion pounds ($9.6 billion) to current investors.
A public consultation on tobacco-control measures started May 31. The government is proposing a ban on vending machines and shop displays. It's also seeking comments on banning logos, though not ``specifically'' proposing that, a consultation document shows. The government is also considering whether to prohibit sales of cigarettes in packs of 10, which are more affordable for children, and limit access to vending machines.
``A display ban is possible, while plain packaging is unlikely,'' Erik Bloomquist, an analyst at JPMorgan Chase & Co. in London, wrote in a research report. Risks for tobacco companies are ``overblown,'' he wrote.
Lambert & Butler
Bristol, England-based Imperial controls about half of the British cigarette market with brands including Lambert & Butler. The government also may ban advertisements for cigarette-related merchandise such as the company's Rizla rolling papers.
While smoking among young people has dwindled from a decade ago, more than 200,000 Britons aged under 16 still take up the habit each year, according to the U.K. Department of Health. They're three times more likely to die of cancer than people who began smoking in their mid-20s, the department said.
Tobacco-related diseases kill 87,000 Britons a year, equal to the population of the northeastern English city of Durham, the government said in a statement May 31. Estimates for annual spending by the National Health Service to treat smoking-linked illnesses run as high as 1.7 billion pounds, the statement shows.
A ban on logos probably would be ``unworkable,'' wrote Jonathan Fell, an analyst at Deutsche Bank, in a note to investors today. Forbidding vending machines and the other proposals wouldn't probably be a ``serious'' threat to the industry, he wrote.
To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net.
Last Updated: June 2, 2008 12:10 EDT
