Buyout firm Carlyle has had its interest sparked by cigarette distributor Palmer & Harvey

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P&H is one of the UK's largest suppliers of tobacco products (Source: Getty)

US buyout firm The Carlyle Group is emerging as the frontrunner in a deal to buy tobacco supplier and forecourt wholesaler Palmer & Harvey (P&H), according to reports.

Carlyle, which formerly owned breakdown service RAC, is close to entering into exclusive negotiations with P&H, sources told Sky News.

Such a deal would preserve thousands of jobs at P&H, which employs around 4,000 people in the UK but has a growing debt pile.

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As the UK’s biggest tobacco distributor, it supplies Tesco, Sainsbury’s, One Stop and Moto, among other convenience retailers.

But Tesco’s buyout of wholesaler Booker could potentially throw a spanner in the works, shedding uncertainty on P&H’s long-term future with Tesco. The Tesco-Booker deal is still being examined by competition regulators.

P&H distributes products for cigarette manufacturers including Imperial Brands and Japan Tobacco International. It owes both companies significant amounts of money, and has been attempting to reach a deal with new investors to help secure a long-term agreement with the manufacturers.

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