When one corporation buys another, the headquarters spoils tends to go to the buyer, according to a story by Richard Craver for the Winston-Salem Journal that touched upon the sale of Lorillard Inc. and the proposed sale of Reynolds American Inc.
With the loss of each headquarters, well-paying jobs went to the acquiring company and there was typically a siphoning and redirection of community support funds.
Greensboro had experienced two body blows, one of which had occurred when ‘the main assets of Lorillard Inc. were sold in June 2015 to ITG Brands LLC, the US subsidiary of Imperial Brands Plc, in a four-party deal involving Reynolds American Inc, Craver wrote.
When it came to British American Tobacco’s likely $49.4 billion purchase of Reynolds, civic and elected officials were said to have their fingers crossed that philanthropic contributions would remain unaltered as much as possible.
Reynolds spokesman Bryan Hatchel said philanthropy was a big part of Reynolds’ legacy, going back to the founder Richard Joshua Reynolds. “He started a legacy of philanthropy that reached into this community of Winston-Salem, and we continue that effort today,” Hatchell said. “Part of our transforming tobacco strategy includes transforming communities in which our employees live and work.”
Winston Salem’s mayor Allen Joines has said part of his confidence of a business-as-usual mindset from BAT is the fact it had been embedded in the Reynolds cultures since acquiring its 42.2 percent ownership stake in July 2004.
British American Tobacco and Reynolds American Inc. have agreed the terms of a recommended offer for BAT to acquire the 57.8 percent of Reynolds it does not already own.
In a note posted on its website, BAT said the transaction had been unanimously approved by the transaction committee of independent Reynolds directors established to evaluate the BAT offer.
The transaction had been approved also by the boards of Reynolds and BAT.
‘The parties expect the transaction to close during the third quarter of 2017, subject to: obtaining affirmative votes from BAT and Reynolds shareholders; obtaining anti-trust approvals in the US and Japan; registration of BAT shares with the SEC; approval of the BAT shares for listing on the LSE and the BAT ADRs on the NYSE; and, other customary conditions,’ the note said. ‘Completion of the merger is not subject to any financing condition.’
BAT said the acquisition would create a stronger, truly global tobacco and next generation products (NGP) company to deliver sustained long-term profit growth and returns with:
‘A balanced presence in high growth emerging markets and high profitability developed markets, combined with direct access to the attractive US market;
‘A portfolio of strong, growing global brands, bringing together ownership of Newport, Kent and Pall Mall;
‘A truly global NGP business, with a world class pipeline of vapor and tobacco heating products and access to the fastest growing NGP markets;
‘At least $400 million of annualised cost synergies anticipated by the end of year three, supporting continued margin improvement;
‘EPS and DPS accretive in the first full year and targeting mid-single digit EPS accretion in year three, with the transaction beating the Group’s WACC for the US by year five;
‘Enhanced cash generation with increased control of a significant proportion of group cash flows;
‘Continued commitment to BAT’s dividend policy with a pay-out ratio of at least 65 percent;
‘A continuing strong financial profile, targeting a solid investment grade credit rating through progressive deleveraging.’
“We are very pleased to have reached an agreement with the transaction committee and board of Reynolds and we look forward to putting the recommended offer to shareholders,” said BAT’s chief executive, Nicandro Durante.
“We have been shareholders in Reynolds since 2004 and we have benefited from the success of the present management team’s strategy, including its acquisition of Lorillard, which we supported with our own investment in 2015.
“BAT has consistently executed a winning strategy and has a proven track record of delivering strong results and returns for its shareholders while successfully investing for future growth.
“Our combination with Reynolds will benefit from utilising the best talent from both organisations.
“It will create a stronger, global tobacco and NGP business with direct access for our products across the most attractive markets in the world.
“We believe this will drive continued, sustainable profit growth and returns for shareholders long into the future.”
Richard E. Thornburgh resigned from the Reynolds American (RAI) board of directors and the board’s audit and finance committee, effective Dec. 7. Thornburgh had served on the RAI board as an independent director since December 2011.
“RAI’s shareholders, board and management have greatly benefited from Dick’s financial acumen and strategic advice and counsel over the last four years,” Thomas C. Wajnert, non-executive chairman of RAI’s board, said in a press release. “RAI has made tremendous progress on its mission to transform not only the company but our industry, including the successful completion of the acquisition of Lorillard, Inc. We are very grateful to Dick for the role he played in advancing key initiatives at RAI and contributing to our commitment to deliver outstanding shareholder value.”
Reynolds American Inc. (RAI) has announced several executive changes at both RAI and its largest subsidiary, R.J. Reynolds Tobacco Company. All the changes will be effective Oct. 1.
Debra Crew, who is currently president and chief commercial officer of R.J. Reynolds, will become president and chief operating officer of the company. She will assume management responsibility for the company’s manufacturing operations and research and development functions, in addition to her ongoing responsibility for the consumer and trade marketing functions.
Nancy Hawley, who is currently senior vice president of operations at R.J. Reynolds, will be promoted to executive vice president of operations for the company.
Daniel J. Herko, who is currently senior vice president of research and development for R.J. Reynolds, will be promoted to executive vice president of research and development for the company. Herko will also become an executive vice president of RAI Services Company and will be responsible for managing regulatory oversight for RAI’s subsidiaries.
When Crew assumes her new responsibilities, Jeffery Gentry, who is currently R.J. Reynolds’ executive vice president of operations and chief scientific officer, will move to a project role overseeing the ongoing integration of Lorillard operations into subsidiaries of RAI. Gentry plans to retire in the first half of 2016.
Thomas Adams, who served as RAI’s executive vice president and chief financial officer from 2008 to March 2015 and has been overseeing the integration of Lorillard operations, now plans to retire on Oct. 1, when Gentry assumes responsibility for overseeing the integration.
“Reynolds American places great importance on its talent-development and succession-planning processes,” says Susan Cameron, RAI’s president and CEO. “As a result, we have a talented pool of top-notch executives ready to move into key leadership roles for our companies. Strong people and strong brands are the keys to success in consumer packaged-goods businesses, and Reynolds American and its subsidiaries are fortunate to have both.”
R.J. Reynolds Tobacco Co. will be producing Vuse digital vapor cigarettes in Tobaccoville, North Carolina, USA, for R.J. Reynolds Vapor Co. under a services agreement between the two companies. The firm will invest millions of dollars in high-speed e-cigarette manufacturing equipment and create 200 full-time manufacturing over the next four years.
“Vuse is a game-changing product and a tangible demonstration of our companies’ mission to transform the tobacco industry,” said Susan M. Cameron, president and CEO of Reynolds American Inc., the parent company of both R.J. Reynolds Tobacco Co. and R.J. Reynolds Vapor Co.
“We need additional production capacity for Vuse to support the national roll-out of the brand, and the highly trained workforce here in our home state of North Carolina made it the perfect choice for our expansion location,” Cameron said.
Cameron said that Vuse is the top-selling vapor cigarette in Colorado and Utah, the two states in which it has broad distribution and full marketing support. A national roll-out of Vuse will begin this summer.
“If our past successes in converting smokers to Vuse are any indication of our future response from adult tobacco consumers nationwide, we’ll need new-generation, high-speed equipment and a larger workforce to support market demand,” Cameron said.
Hiring for the new full-time manufacturing positions will begin this summer and extend over the next four years. Installation of the new-generation equipment, too, will begin this summer.
Currently, production of Vuse cartridges and other components is done for R.J. Reynolds Vapor Co. at a contractor’s facility in Kansas. Cameron said that both the existing facility and the new equipment will be needed for the foreseeable future to meet anticipated market demand for Vuse.
Reynolds American Inc. has agreed to resume discussions with the Farm Labor Organizing Committee (FLOC) about ways to address alleged farm-worker abuse, according to a story by Federico Martinez for The Blade (Toledo, Ohio).
Reynolds was said to have agreed to resume the meetings after the farm-labor union and advocacy group staged a protest outside the tobacco company’s annual shareholders meeting in Winston-Salem, North Carolina, USA.
“It appears that there is some interest on their part,” said FLOC president Baldemar Velasquez, who added that he hadn’t heard from Reynolds’ officials since December. “Whether or not they are sincere about addressing the concerns is another issue.”
Velasquez and other critics say they want Reynolds’ officials to address several issues, including the human trafficking of workers from Mexico and Central America, and the numerous human-rights abuses from which they say tobacco-industry laborers frequently suffer.
FLOC’s primary mission was to persuade the tobacco company to support farm workers’ efforts to form a union, said Velasquez.
Many tobacco farm workers lived in labor camps with inadequate or non-functioning toilets or showers and other substandard conditions. They also suffered from nicotine poisoning and exposure to dangerous pesticides, he added.
Reynolds’ spokesman David Howard said the two sides hadn’t met since December but they had communicated by phone and email.
“We’ve had a series of discussions since December,” Howard said. “They are ongoing and we will continue meeting and having dialogue.”
Reynolds American Inc.’s experiment with making e-cigarettes is about to move to a larger distribution scale, the company said Thursday at its annual shareholders meeting.
The company provided several strategic updates during formal remarks by Daan Delen, its CEO and president, and during a question-and-answer session that wasn’t consumed by farm-worker issues, according to the website equities.com.
Reynolds also said it has placed links on its website — www.reynoldsamerican.com — under the corporate governance header where its 2012 political-oriented contributions are listed. Delen said the company opted for more disclosure after getting requests from various stakeholder groups.
R.J. Reynolds Vapor Co. remains in test markets with its internally developed Vuse e-cigs with no reported sales numbers. Vuse is being sold at Tarheel Tobacco stores at 6311 Stadium Drive in Clemmons, 3193 Peters Creek Parkway in Winston-Salem and in Danville, Va.
Reynolds American Inc. is due to host a conference call and webcast following the release of first-quarter 2013 financial results before the market opens on April 23.
The company’s president and CEO, Daniel M. Delen, its CFO, Thomas R. Adams, and its vice president of investor relations, Morris L. Moore, will speak during the conference call and webcast, which will start at 09.00 hours Eastern Time.
Registration for the event, which will be available at www.reynoldsamerican.com on a listen-only basis, is now open. A replay of the conference call will be available at the same website.
The call-in numbers are (877) 390 5533 (toll-free) and (678) 894 3969 (International).
