WINSTON-SALEM, N.C. & GREENSBORO, N.C. -- Reynolds American Inc. (RAI) and Lorillard Inc. have announced that the final significant condition pending before Reynolds American can proceed with its acquisition of Lorillard and complete the related divestiture transactions has been successfully completed. The companies expect to complete the acquisition and the related transactions in which they will divest certain brands and other assets to ITG Brands on June 12, 2015, subject to remaining closing conditions.
The federal district court overseeing a remedial order in relation to a lawsuit brought by the U.S. Department of Justice against subsidiaries of Reynolds American and Lorillard, along with other companies, has approved the sale of certain cigarette brands and businesses to Imperial Tobacco’s ITG Brands LLC subsidiary.
“We are very pleased to be able to proceed with this transformative acquisition,” said Susan M. Cameron, Reynold American’s president and CEO. “With the addition of Lorillard's strong Newport brand, RAI's operating companies will have brand portfolios that reflect diversification and strength across product categories and across geographies.”
Cameron said that she expects the transaction to provide Reynolds American with additional resources to invest in innovation, research and development and its operating companies’ brands.
“Investing in innovation will benefit adult tobacco consumers and wholesale and retail customers alike,” she said.
Following the transactions, Reynolds American is projected to have more than $11 billion in annual revenues and approximately $5 billion in annual operating income, and its operating companies will have key brands across major industry categories: Newport, Camel, Pall Mall and Natural American Spirit in combustible cigarettes; Grizzly in smokeless tobacco; and Vuse in the vapor market.
“This is an important milestone in our ability to deliver value to our shareholders, and benefits to our customers, consumers and employees,” said Murray Kessler, Lorillard’s chairman, president and CEO. “We look forward to continuing to work with Reynolds American and Imperial Tobacco to successfully complete these transactions.”
Kessler will join Reynolds American’s board following the closure of the transactions.
As previously disclosed on July 15, 2014, Reynolds American and Lorillard announced an agreement in which Reynolds American agreed to acquire Lorillard in a cash-and-stock transaction.
Also on July 15, Reynolds American and Lorillard announced agreements for their operating companies to sell the KOOL, Salem, Winston, Maverick and blu eCigs brands and other assets and liabilities to a subsidiary of Imperial Tobacco Group PLC for a total consideration of approximately $7.1 billion in cash.
As part of the transactions, British American Tobacco p.l.c. (BAT) will maintain its approximately 42% ownership in Reynolds American through an investment of approximately $4.7 billion.
Bristol, England-based Imperial Tobacco Group PLC is a multi-national tobacco company offering cigarettes, fine-cut tobacco, cigars, rolling papers and tubes.
Greensboro, N.C.-based Lorillard offers the Newport, Kent, True, Maverick and Old Gold cigarette brands, as well as the blu eCigs electronic cigarette brand.
Reynolds American, Winston-Salem, N.C., is the parent company of R.J. Reynolds Tobacco, with cigarette brands including Camel, Pall Mall, Winston, Kool, Doral, Salem, Misty and Capri; American Snuff, with smokeless tobacco product brands including Grizzly and Kodiak; Santa Fe Natural Tobacco Co. Inc., which manufactures and markets Natural American Spirit 100% additive-free natural tobacco products; Niconovum USA Inc.; Niconovum AB, which market nicotine replacement therapy products in the United States and Sweden, respectively, under the Zonnic brand; and R.J. Reynolds Vapor Co., which makes and markets Vuse electronic cigarettes.
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