Thursday, July 19, 2007

Capitalist games

More than 245 years after the English briefly held Havana, the British are close to becoming a big player in Cuba again.

This time it will be all about tobacco.

But first, some background …

The Castro regime, which confiscated the Cuban tobacco industry in the early 1960s, has been in bed for some time now with a huge Franco-Spanish tobacco conglomerate called Altadis.

This arrangement allows Altadis to market Cuban cigars around the world, except in the US, of course, with half of the money going back to Havana. Naturally.

It’s a hugely profitable deal for the Castro brothers but also for their capitalist friends.

Now, Altadis has received a not-unexpected takeover offer from Imperial Tobacco, a large British firm, which is offering 50 Euros per share.

From all accounts, Imperial is likely to be successful.

There is just one glitch: under the contract with Altadis, the Cubans can break their joint venture agreement if the company changes owners at any stage.

Which is why the head of Imperial, Gareth Davies, has told reporters in London that he intends to travel to Havana soon to “woo” the Castro regime.

The very pragmatic Mr Davies said he hoped to secure the regime’s support for the proposed takeover deal - and persuade it not to exercise the change of control clause in the contract.

“We are hopeful that the change of control clause will not be exercised,” he said. “We hope this joint venture will continue to go from strength to strength – it’s a business we plan to invest in.”

Nice one, no?


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