By Esha Vaish
(Reuters) - British American Tobacco Plc's (L:BATS) chief executive said he does not expect any "big consolidation" among the world's top four tobacco companies in the next few years, quashing rumours that the maker of Dunhill cigarettes might bid for a rival.
The world's No. 2 cigarette company will instead look for smaller "bolt-on" acquisitions, particularly in Africa and Asia, CEO Nicandro Durante told Reuters in an interview on Thursday, after BAT reported a smaller-than-expected drop in 2015 revenue.
With the world smoking less every year due to health concerns, tougher regulation and economic weakness, competition among the big four tobacco firms is stronger than ever.
Multiple media reports in recent months have linked both BAT and Japan Tobacco Inc (T:2914) with a possible bid for Imperial Brands Plc (L:IMB), a deal that some analysts say would be the last big play in a shrinking, consolidating market.
"Do I expect something like that in the short to medium term? The answer is 'no'," Durante said. "If you ask me the question: what's going to happen in the long term? Nobody knows."
Any major consolidation within "Big Tobacco" would face complications, not least because each international company is present in markets where buying Imperial would take their share over regulators' monopoly thresholds.
Over the past year, BAT has won market share and weathered a global decline in cigarette sales better than its main rivals.
Against an estimated industry-wide decline of 2.3 percent, the company reported a decline of 0.8 percent in the number of cigarettes sold last year, excluding an acquisition in Croatia.
Though full-year revenue fell 6.2 percent to 13.10 billion pounds ($18.25 billion), with currency movements making raw materials more costly, this trumped the average analyst estimate of 12.95 billion pounds, according to Thomson Reuters I/B/E/S.
Excluding the impact of currency, BAT said revenue rose 5.4 percent, helped by price increases.
In a trading environment that will remain "challenging" in 2016, BAT expects its earnings per share to grow in high single digits in percentage terms, Durante said in a video published on the company's website.
BAT's shares rose nearly 1 percent to 3,869 pence at 1500 GMT, having earlier fallen as much as 1.5 percent.($1 = 0.7179 pounds)