Attempt to block Lorillard acquisition

A Lorillard investor is going to court in an attempt to block the company’s billion dollar acquisition by Reynolds American, claiming the deal favors the buyer, according to a story by Sophia Pearson for Bloomberg News.

Reynolds said on July 15 that it would acquire Lorillard for cash and stock in a deal that values Lorillard at $68.88 a share.

But, according to the complaint made public yesterday in Delaware Chancery Court, the proposed deal is the product of a flawed process and provides little benefit to stockholders.

‘To the detriment of the company’s shareholders, the terms of the merger agreement substantially favor Reynolds and are calculated to unreasonably dissuade potential suitors from making competing offers,’ the investor, Vincent Valentino, said in the complaint. He is seeking to represent all Lorillard shareholders.

Valentino said that Lorillard shareholders wouldn’t benefit from a transaction that, as part of the deal, would see Imperial Tobacco Group acquire brands such as Kool and Blu e-cigarettes for $7.1 billion.

The complaint claims too that the deal is ‘unfair and inadequate because, among other things, the intrinsic value of Lorillard is materially in excess of the amount offered’.