Nov. 19 (Bloomberg) -- Cie. Financiere Richemont SA, the luxury-goods company controlled by South Africa's Rupert family, may spin off its stake in British American Tobacco Plc before increased taxes in Luxembourg hurt the investment.

Richemont shares rose the most since June 2006. The maker of Cartier jewelry and Purdey shotguns may split its luxury business from its stake in BAT, whose brands include Lucky Strikes, according to a statement from the Geneva-based company today.

Richemont and the billionaire Ruperts' Remgro Ltd. use Luxembourg-based R&R Holdings SA to own nearly a third of BAT, worth about 10.8 billion pounds ($22 billion). The European Union forced Luxembourg to end tax breaks for holding companies in 2010, prompting Richemont and R&R to reorganize.

``By giving BAT shares to its shareholders, Richemont will become a pure-play luxury goods group,'' said Jon Cox, an analyst at Landsbanki Kepler in Zurich, who raised his price estimate on the shares to 100 Swiss francs ($89.43) from 90 francs.

Richemont is set to cut its link to the cigarette industry after six decades. Anton Rupert founded Rembrandt Tobacco Corp. in 1948 in South Africa and used the cash raised from the business to build Richemont, the owner of the Piaget and Dunhill brands, and Remgro, South Africa's largest investment company.

The Ruperts set up Richemont in 1988 to hold Rembrandt's investments outside of South Africa during the apartheid era, when sanctions limited investment in that country.

Billionaire Ruperts

Shares of Richemont, the world's second-biggest luxury- goods maker, advanced 1.25 Swiss francs, or 1.71 percent, to 74.25 in Zurich. Paris-based LVMH Moet Hennessy Louis Vuitton SA is the world's biggest luxury company.

BAT shares declined 46 pence, or 2.5 percent, to 1,772 pence in London, where the company is based. Remgro stock gained 20 cents to 186 rand in Johannesburg.

Rembrandt and Richemont sold their tobacco assets to BAT in 1999, obtaining stakes in the London-based cigarette maker in return. Rembrandt split up into Remgro and VenFin Ltd. in 2000. Anton Rupert, who died last year, let his son Johan succeed him as chairman of Remgro and Richemont.

Johan Rupert's family ranks No. 194 on the Forbes list of billionaires with a fortune estimated at $4.3 billion.

Shareholder Options

Some Luxembourg holding companies don't have to pay taxes on capital gains, income or dividends, though that's being phased out, according to Richemont spokesman Alan Grieve. Richemont said its investors may get the option of becoming direct shareholders of the company's 19.3 percent BAT stake.

Remgro, which indirectly owns 10.6 percent of BAT and a third of R&R, said it may also give its shareholders the option of owning BAT shares. The company is based in Stellenbosch, South Africa.

``The plans for this possible restructuring remain subject to further review,'' both companies said. ``There can be no certainty that any such review would lead to a proposal being announced.''

Richemont is considering a ``variety'' of options to deal with the tax change, Grieve said.

British American Tobacco said it may list its shares on the Johannesburg Stock Exchange to assist in the transaction.

To contact the reporters on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net; Vernon Wessels in Johannesburg at vwessels@bloomberg.net.

Last Updated: November 19, 2007 12:03 EST