Founded in 1901, Imperial Tobacco was the result of a merger between the former rivals W.D. & H.O. Wills and Stephen Mitchell & Son aimed at strengthen their business against increased competition from the United States in the tobacco industry.
A particular threat to the British tobacco industry was the American Tobacco Company which, after achieving dominance in the United States planned to grow its business in the European market. American Tobacco had substantial cash reserves, and had developed the business practice of selling products at a loss to drive competition out of the market.
Also threatened by this increased competition Lambert & Butler, William Clarke & Son, John Player & Sons, Franklyn Davey, Edwards Ringer, J & F Bell and F & J Smith quickly merged with Imperial Tobacco.
By using its vast network of brands and tobacconists Imperial Tobacco defended itself against American Tobacco's strategies and managed to make a profit in its first year of operations compared to American's substantial loss.
Embolded by its success, Imperial made progress in expanding into the US market. However, in 1902 American Tobacco Company closed its British operations, and Imperial halted its expansion plans. Instead, the rivals created British American Tobacco which would market Imperial Tobacco's and American Tobacco's brands in markets not already catered too by the founding businesses. While American would sell its shareholding in BAT in 1911, Imperial maintained partial ownership until 1980.
In the 1920s, Imperial expanded manufacturing operations to Africa and Canada while making efforts to break the French cigarette paper monopoly by researching alternative methods and manufacturers.
As many companies did in the 1960s Imperial Tobacco diversified greatly. Despite controlling 80% of the British cigarette market, Imperial invested into restaurants, food service, hotels and distribution networks. To reflect this change in focus in 1973 the company became Imperial Group Limited.
In an effort to control costs in a shrinking tobacco market Imperial underwent a substantial reorganization early in the 1980s which culminated in the closure of 4 factories and streamlined brand administration.
By 1986 the group was still under financial strain as the effect of its diversification continued to be felt. However, the Imperial Group was purchased by Hanson Trust plc for £2.5 billion. Immediately Hanson took efforts to reduce Imperial's footprint and soon sold over £2.3 billion worth of companies owned by Imperial.
In 1996 as an effort from Hanson Trust to streamline its business Imperial Tobacco was de-merged. The new business, Imperial Tobacco plc was listed on the London Stock Exchange.
Since the de-merger Imperial has extensively expanded its technology base in manufacturing while expanding its tobacco related businesses.
Imperial Tobacco also focused on maximizing shareholder value by streamlining its operations. In 1999 the company announced an 18 month cost cutting exercise. As a result of this a Van Nelle Tabak plant was closed.
During 2001 Imperial entered into an agreement with Philip Morris International for the distribution of Marlboro and Chesterfield cigarettes in the United Kingdom.
In 2002 Imperial Tobacco acquired 90.01% of Reemtsma Cigarettenfabriken GmbH cementing their position as a global tobacco company - along with immediately gaining a leading position in the German cigarette market. This purchase also extended Imperial Tobacco's market share in East Europe and Asia. The remainder of Reemtsma shares where acquired in 2004.
On the 8th of February 2007 Imperial Tobacco announced that it intends to acquire Commonwealth Brands for $1.9 billion USD. When the deal is finalized, Imperial Tobacco will have its first exposure on the US market since 1901.
Imperial Tobacco is the leader in the UK tobacco market and is now the fourth largest global tobacco company with over 14500 employees worldwide.