BAT shares drop after reports of US probe

Shares in British American Tobacco dropped sharply on Tuesday morning after reports that the cigarette-maker is facing an investigation in the US.

The Times revealed on Tuesday that US authorities are looking into potential sanctions violations at the company that makes Dunhill cigarettes.

The Department of Justice and the Office of Foreign Assets Control, an enforcement arm of the US Treasury, is probing “suspicions of breach of sanctions”, the newspaper reported.

The PA news agency has been unable to independently verify the report, and BAT has been contacted for comment.

The report did not include detail on what sanctions the company is suspected to have broken, but it was enough to send shares tumbling as markets opened on Tuesday.

Stock was down as much as 6.2% to 2,832.5p per share.

BAT is already facing an investigation by the UK’s Serious Fraud Office.

In 2017 the SFO said it had started the probe amid “suspicions of corruption in the conduct of business by BAT plc, its subsidiaries and associated persons”.

BAT operates in 180 countries around the world, with sales of almost £26 billion in the last financial year and profits of £9 billion.

Although still heavily reliant on tobacco sales, the business has invested heavily in new forms of nicotine intake in recent years.

Its new categories business, which includes vaping, has ballooned to £1.3 billion.

Earlier this year, BAT welcomed a move by US regulators to clamp down on flavoured vape pens, in a bid to crack down on children using the products.

The FTSE 100 firm said at the time that it thought “appropriate enforcement will ensure the sustainability of adult consumer choice across all product categories”.

It also provided clarity, the business said.