RJR GPI Reaches Agreement With Japan Tobacco

Buys rights to sell brands in U.S. duty free, U.S. overseas military outlets

WINSTON-SALEM, N.C. -- R.J. Reynolds Global Products Inc. (GPI) has entered into an agreement with Japan Tobacco Inc. (JT) and its group of companies to purchase the rights to sell several cigarette brands formerly sold by the JT Group to U.S. duty-free shops and U.S. overseas military outlets.

The companies expect the deal to be closed by the end of the year. Financial terms of the transaction are not being disclosed.

Brands covered by the agreement include Camel, Winston, Salem, Now, Vantage, More and Doral. The JT Group retains [image-nocss] its international rights (other than in U.S. overseas military outlets) to the brands included in the agreement.

Following the 2004 business combination of R.J. Reynolds Tobacco Co. and the U.S. business of Brown & Williamson Tobacco Corp. (B&W), GPI assumed responsibility for managing the brands formerly distributed by B&W in U.S. duty-free and U.S. overseas military markets, including Kool, Dunhill, Lucky Strike, Pall Mall, Silk Cut, Senior Service, State Express 555, Newport and Capri.

The addition of these strong brands to our portfolio will enable us to consolidate our marketing efforts to our U.S. adult smokers who purchase products in these two channels, said John A. Scarritt, president of GPI. These are important brands in U.S. duty-free and U.S. military outlets, and we can leverage our existing infrastructure more efficiently, while achieving greater economies of scale, by enhancing our existing strong brand lineup.

GPI manufactures, sells and distributes American-blend cigarettes and other tobacco products to a variety of customers worldwide. It is an indirect wholly owned subsidiary of Reynolds American Inc. and is responsible for managing and developing international business opportunities. The major lines of business for GPI fall into two areas: portfolio markets (providing cigarettes for retail sale) and business-to-business markets (providing cigarettes and components to other manufacturers). The portfolio markets include Puerto Rico, R.J. Reynolds- Gallaher International (a joint venture in Europe) and business in the Pacific U.S. territories, overseas U.S. military and at U.S. duty free outlets. In the business-to-business area, GPI manages contract manufacturing for major international customers and sells tobacco components to cigarette manufacturers worldwide.