IMPERIAL TOBACCO (IMT).

Buying GeRmanys Reemtsma for GBP3.6bn in May established Imperial as a king-size player in the global tobacco sector. Only Philip Morris, BAT, and Japan Tobacco are bigger. Reemtsma didnt come cheap, though. Imperial paid a multiple of 13 times Reemtsmas cash profits last year. Thats well ahead of the 8.4 times Gallaher paid for Austria Tabak last year.

But Imperials management is unrepentant. It says the return made from Reemtsma in its first full-year of ownership will exceed Imperials 7 per cent weighted average cost of capital. This confidence is partly based on th