Mumbai: UK's Imperial Tobacco has made a €l1.5-billion ($9.78 billion / Rs43,182.5 crore) cash bid for its Franco-Spanish rival Altadis.

Madrid-based Altadis, maker of the Gauloises and Fortuna brand cigarettes, said the unsolicited offer, at €45 a share, was subject to approval from the company's board.

The board is due to meet in the next few days to discuss the offer.

Imperial, the world's fourth-largest cigarette group, maker of brands such as Lambert & Butler, West and Davidoff, said things are at an early stage and there could be no certainty that the approach would lead to a formal offer.

Altadis has a better business and stronger brands than the Gallaher Group for which Japan Tobacco is paying £7.5 billion in cash, but the offer was at the same 12.5 times 2007 forecast earnings that Japan Tobacco is paying.

The Imperial-Altadis combine could generate annual savings of €270 million. Imperial has also a good track record of making acquisitions work.

Imperial's biggest acquisition since the company got listed in 1996 was Germany's Reemtsma in 2002.

Imperial says combining the fourth and fifth largest cigarette companies in the world on a friendly basis makes compelling sense and would make a good strategic fit, and analyst say there would be no major competition problems.

Altadis, however, has repeatedly said that it sees itself as a buyer of assets, not a target, and has no plans to sell any of its three units - cigarettes, cigars and logistics - after its formation when Spain's Tabacalera and France's Seita merged in 1999.

Cost-competition, unfavourable tax regime and a smoking ban in its biggest market, Spain, where its Fortuna cigarette lost its top-selling spot to Philip Morris' Marlboro brand, owned by the world's top tobacco group Altria.