Reynolds American (RAI) is likely to finish its purchase of Lorillard on Friday. In addition, Imperial Tobacco’s ITG Brands will obtain from RAI and Lorillard operating companies the KOOL, Salem, Winston and Maverick cigarette brands, and the blu eCigs electronic cigarette brand, together with other assets.
In a notice shared on both the RAI and Lorillard web pages, the two companies reported recently the conclusion of the acquisition’s ‘final considerable condition’.
‘The federal district court supervising a helpful order in regards to a legal action delivered by the U.S. Department of Justice against subsidiaries of RAI and Lorillard, in addition to other companies, has authorized the sale of particular cigarette brands and businesses to Imperial Tobacco’s ITG Brands, LLC subsidiary,’ the note mentioned.
“We are very happy to be able to continue with this transformative purchase,” stated Susan M. Cameron, RAI’s president and CEO. “With the addition of Lorillard’s strong Newport brand, RAI’s operating companies will have brand portfolios that reveal diversity and power across product categories and across geographies.”
It is expected that, following the transactions, RAI will generate over $11 billion in yearly profits and about $5 billion in annual operating income. In addition, its operating companies will have ‘major brands’ across key 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 essential milestone in our capacity to offer value to our shareholders, and advantages to our customers, buyers and employees,” stated Murray Kessler, Lorillard’s chairman, president and CEO. “We look forward to proceed our work with Reynolds American and Imperial Tobacco to finish these transactions with success.”
‘In addition on July 15, 2014, RAI and Lorillard declared their agreements for the operating companies to offer the KOOL, Salem, Winston, Maverick and blu eCigs brands and other assets and liabilities to a branch of Imperial Tobacco Group, PLC for an overall consideration of about $7.1 billion in cash. ‘Included in the transactions, British American Tobacco (BAT) will keep its 42 % ownership in RAI via an investment of around $4.7 billion.