The Supreme Court of North Carolina has upheld an April 2020 ruling by the N.C. Business Court that Reynolds American Inc. (RAI) provided “fair value” to shareholders who objected to the return they received from Reynolds’ $54.5 billion sale to British American Tobacco, reports The Winston-Salem Journal.
In January 2017, BAT announced it would acquire the 57.8 percent of RAI that it did not already own. BAT acquired a 42.2 percent ownership stake as part of Reynolds’ $4.4 billion purchase of BAT subsidiary Brown & Williamson Tobacco Corp. in 2004.
BAT’s initial offer for the remaining shares was valued at $59.64 a share. When the deal closed, the share price value had reached $65.87.
Believing the agreed-upon deal price significantly undervalued Reynolds, a group of dissenting shareholders, led by Third Motion Equities Master Fund, refused to tender their shares at closing. RAI then opted to pay them $59.64 per share plus interest..
The N.C. Business Court ruled that Reynolds “properly determined the ‘fair value’ of shares, saying the amount equaled or exceeded the value of Reynolds shares as of the date of the merger.”
The NC Supreme Court agreed with the Business Court judgment that that no further payments to the dissenters are required.