British cigarette maker Imperial Tobacco said it would buy Commonwealth Brands, the fourth biggest player in the United States, for 1.9 billion dollars (1.46 billion euros).

Commonwealth makes brands including USA Gold, the eighth best-selling brand in the country, and Sonoma, ranked fourteenth and the best seller in the US military.

Imperial said it planned to buy CBHC Inc, which trades at Commonwealth Brands, from Houchens Industries Inc, giving it a 3.7 percent share of the US cigarette market for 974 million pounds in cash.

"This is an excellent deal for Imperial, which will create significant value for our shareholders, and is consistent with our strategy of entering the US tobacco market in a low risk manner," said Imperial Tobacco chief executive Gareth Davis.

"I am delighted that we will finally have the US as a significant part of our international footprint and believe that we will benefit considerably from having the US in our market portfolio."

In late afternoon trade, Imperial shares smoked out a loss of 2.78 percent at 2,169 pence, while London's FTSE 100 shares index shed 0.37 percent to 6,345.90 points.

Broker Merrill Lynch said the Commonwealth deal appeared to be a fair price and would add to earnings per share and value within the first year.

However, it noted that Imperial shares have been trading at a premium of around 10 percent on speculation of a takeover bid from US food and tobacco giant Altria, owner of Marlboro-maker Philip Morris.

The Commonwealth deal makes that scenario look less likely, while it also reduced the likelihood of a mooted tie-up with Spanish peer Altadis, according to Merrill Lynch.

Imperial, which makes Davidoff cigarettes, Drum tobacco and Rizla cigarette papers among others, had said last year that it was keen to widen its geographical base through bolt-on acquisitions.