Cigarette maker BAT has slipped 32p to £19.02 on concerns that a large chunk of shares might soon come on the market.
Swiss group Richemont has today said it may split its luxury business off into a separate company, leaving an investment business to hold the 30% in BAT it has in partnership with a company called Remgro.
Richemont said its investors would be able to receive a substantial part of their interest in BAT directly, and Citigroup believes this could put pressure on BAT shares.
The bank said: "Of the 30% stake that R&R owns in BAT, about 6% is owned (indirectly) by the Rupert family, 11% through South African listed paper, and 13% directly via Richemont. Our concern is that some of the 13% comes back on to the market. We see little risk of the family or South African holders selling, depending on exchange controls."
Meanwhile Imperial Tobacco fell 79p to £21.08 as UBS put a sell rating on the company with a £19.60 target after its £4.9bn rights issue.
Elsewhere power companies were in demand following news from the US that NRG Energy, the second-biggest power company in Texas, has made an unsolicited $9.6bn offer for Calpine Corporation.
The news lifted Scottish & Southern Energy, International Power and British Energy by nearly 3% each.
Among the miners Rio Tinto rose 80p to £67.21 after analysts at Bernstein put an £80 target on the shares, including a
