Reynolds CEO: Lorillard Deal Will Get OK
Company also vows to fight $23.6 billion damages in Florida case
WINSTON-SALEM, N.C. -- Reynolds American Inc. CEO Susan Cameron is confident federal regulators will allow the tobacco company to acquire rival Lorillard Inc.
"The thing to remember is the big player in this industry [Altria] has over 50% share; [Reynolds American] will come out of this transaction … with 33% market share," Cameron said in an interview with CNBC's Closing Bell.
The No. 3 player, Imperial Tobacco, will also benefit--acquiring Winston, Kool, Salem, Maverick and [electronic cigarette brand] Blu in the deal--and will be a "strong competitor," she added. "I believe as people digest what is a very complicated four-party transaction, they will realize that strategically this is fantastic for Reynolds American, and it's great for all four shareholders."
Meanwhile, R.J. Reynolds is following through with its vow to fight a court verdict totaling $23.6 billion in punitive damages, reported USA Today. On July 28, the tobacco company filed for a post-trial hearing in a Florida federal appeals court to challenge a July 19 lawsuit verdict for a widow whose husband was a longtime smoker.
In its post-trial filing, the company said that the punitive award would result in "economic castigation" to the company, asserting that its "stipulated net worth between 2006 and 2008 averaged approximately $8 billion."
"We feel that this [the verdict] is grossly excessive," Cameron told CNBC. "We believe that it is not legal in the state of Florida, nor constitutionally. We feel the court will and should set it aside."
The plaintiff's attorney, Christopher Chestnut, insisted that "no one lawsuit was going to cripple the company."
"They [Reynolds] were making billions of dollars in the '50s," Chestnut said. "The company made it clear that $100 million wasn't big enough to send a message. They're arrogant."
The case was originally a part of the class-action Engle-Progeny lawsuit against tobacco companies in 1994. The Florida Supreme Court rejected the jury's verdict, however, and said that plaintiffs could only file for lawsuits individually.
For its defense, the tobacco company cited past settlements stemming from the Engle-Progeny class-action lawsuit, saying that the settlement was nearly 100 times larger than any previous punitive award.
Reynolds said that the case decision was a product of "passion and prejudice," underscoring what it believed was a lack of conclusive evidence.
Reynolds American is the parent company of R.J. Reynolds Tobacco; American Snuff Co. LLC; Santa Fe Natural Tobacco Co. Inc.; Niconovum USA Inc.; Niconovum AB; and R.J. Reynolds Vapor. R.J. Reynolds Tobacco is the second-largest U.S. tobacco company. Its brands include two of the best-selling cigarettes in the United States: Camel and Pall Mall. These brands, and its other brands, including Winston, Kool, Doral, Salem, Misty and Capri, are manufactured in a variety of styles and marketed in the United States. American Snuff is the nation's second-largest manufacturer of smokeless tobacco products. Its leading brands are Grizzly and Kodiak. Santa Fe manufactures and markets Natural American Spirit 100% additive-free natural tobacco products, including styles made with organic tobacco. Niconovum USA and Niconovum AB market nicotine replacement therapy products in the United States and Sweden, respectively, under the Zonnic brand name. R.J. Reynolds Vapor makes and markets Vuse e-cigarettes.