British American Tobacco (BAT) has indicated that it could raise its offer for Brazil's biggest cigarette maker Souza Cruz.
BAT wants to extract more profit out of Brazil, its biggest market, as the volume of cigarettes sold the worldover declines amid increased government restrictions and the rise of the electronic cigarette.
The cigarette-maker also said a decision over Reynolds American's planned purchase of American tobacco-maker Lorillard should come "shortly" from the US Federal Trade Commission (FTC). The British firm is funding $4.7bn (£3bn, €4.3bn) of the $25bn deal in order to keep a 42% stake in the enlarged business.
BAT's first-quarter revenue rose 1.7% at constant exchange rates, trailing the 3.5% median growth estimate of analysts polled by Bloomberg.
Shares in BAT, the maker of Pall Mall and Lucky Strike cigarettes, were trading 1.36% lower at 1.39pm in London. The stock has gained some 3.49% so far this year.
BAT said in a 29 April interim statement: "In accordance with Brazilian regulatory procedures, on 9 April 2015 a special free float Souza Cruz shareholders meeting approved the appointment of Credit Suisse (Brasil) S.A. to undertake a new valuation of Souza Cruz shares within 30 days of this date.
"Any actual offer which may be made by the Group for the Souza Cruz shares which it does not own must be at a price which is within or above such valuation.
"If an offer is made, we expect that the financial settlement relating to such offer would occur in Q3 2015."
Chief executive Nicandro Durante commented: "Our market share increased by 40 bps driven by our Global Drive Brands which continue to deliver strong share and volume growth. Revenue increased at constant rates of exchange, driven by pricing more than offsetting lower volume, while adverse exchange rate movements led to a reduction in reported revenue.
"I remain confident that we will deliver another year of good earnings growth at constant rates of exchange, with performance significantly skewed to the second half of the year principally due to a strong first-half volume comparator and the timing of price increases."
Morningstar analyst Philip Gorham told Bloomberg: "The second half should be better, but these results now put them under a bit more pressure to deliver decent 'hockey stick' results for the full year."
BAT's $3.5bn offer for the stake it does not already own in Souza Cruze was rejected by Aberdeen Asset Management, the second-largest shareholder in the Brazilian firm.