Imperial offers P&H light relief

CIGARETTES giant Imperial Brands ignited survival hopes for Palmer & Harvey yesterday after lining up emergency funding for the struggling wholesaler.

Imperial, whose brands include Lambert & Butler and Davidoff, and Camel and Silk Cut maker Japan Tobacco, are understood to have offered to pump in millions of pounds to support P&H, paving the way for a potential takeover by private equity group Carlyle. The pair have already provided combined loans earlier this year of about £60million.

Lenders to P&H, including Barclays, HSBC and Royal Bank of Scotland, have also reportedly agreed to a financing package for the business, which is the UK’s biggest tobacco distributor, employing 4,000 workers.

FTSE 100 heavyweight Imperial said: “We have been working, together with other stakeholders, to seek to create a sustainable future for Palmer & Harvey, with whom we have a close trading relationship.”

A source close to the talks said: “It is premature to say a deal has been done, but it is looking very positive. Carlyle has a very credible bid and everyone is hopeful.”

Staff at P&H, which supplies about 90,000 retail outlets around the UK with cigarettes and groceries and is one of the country’s biggest companies to be owned by current and former employees, have faced months of uncertainty over its financial health.

Concerns were heightened after a £3.7billion takeover bid for cash and carry firm Booker Group by supermarket giant Tesco, which accounts for roughly 40 per cent of P&H’s revenues.

That deal faces an in-depth investigation by the Competition and Markets Authority, but its passage could be smoothed if Tesco agrees to extend its current distribution deal with P&H.

A spokesman for P&H declined to comment.