WINSTON-SALEM, N.C.,
Jan. 17, 2017 /PRNewswire/ --
Reynolds American Inc. (NYSE: RAI) today announced that it has
reached an agreement with British American Tobacco p.l.c. (LSE:
BATS) under which BAT will acquire the 57.8% of RAI common stock
that BAT does not currently own for $29.44 per share in cash and a number of BAT
American Depositary Shares representing 0.5260 of a BAT ordinary
share, currently worth $30.20 per
share based on the BAT closing share price as of January 16, 2017, and the corresponding
Dollar-Sterling exchange rate.
The per-share price represents a 26.4% premium to RAI's closing
price as of October 20, 2016, the day
prior to BAT's public proposal to acquire the outstanding shares
that BAT does not currently own. Under the terms of the agreement,
RAI shareholders will receive for each share of RAI common stock
they own, $29.44 in cash and a number
of BAT American Depositary Shares representing 0.5260 of a BAT
ordinary share. The BAT American Depositary Shares will be listed
on the New York Stock Exchange. RAI shareholders will own
approximately 19% of the combined company.
The transaction has been approved by the independent directors
of RAI who formed a transaction committee to negotiate with BAT,
given BAT's existing ownership stake and representation on RAI's
board of directors, and by the boards of directors of both
companies.
Following the transaction, the combined companies become a
stronger, truly global tobacco and Next Generation Products
company, delivering sustained long-term profit growth and returns.
It will maintain a presence in both profitable developed and
high-growth developing markets while bringing together a compelling
and complementary global portfolio of strong brands including
Newport, Kent and Pall Mall. The
companies' combined next-generation product development and R&D
capabilities will create an innovative pipeline of vapor and
tobacco-heating products, delivering both an array of new product
options for adult tobacco consumers, as well as diversified sources
of profit growth opportunities for investors.
"Through this transaction, we form an industry leader that will
focus on innovation and brand building," said Susan M. Cameron, executive chairman of Reynolds
American's board of directors. "This combination will create a
truly global tobacco company with multiple iconic tobacco brands,
and a world-class pipeline of next-generation vapor and
tobacco-heating products."
"The transaction delivers significant value to RAI shareholders,
and the independent directors on the transaction committee have
unanimously voted in favor of the transaction," said Lionel L. Nowell, III, lead independent director
of Reynolds American's board of directors. "This is an agreement
that offers a compelling premium to shareholders, as well as
continued ownership in a company that is well-positioned for
long-term success."
"We look forward to bringing together the two companies' highly
complementary cultures and shared commitment to innovation and
transformation in our industry," said Debra
A. Crew, Reynolds American's president and chief executive
officer. "British American Tobacco is the best partner for Reynolds
American's next phase of growth, and together the two companies
will create the leading portfolio of tobacco and next-generation
products for adult tobacco consumers."
"We are very pleased to have reached agreement with the board of
Reynolds American as we believe that the combination of our two
great companies has a very compelling strategic and financial logic
that will provide a lasting benefit to shareholders, employees and
all other stakeholders," said Nicandro
Durante, British American Tobacco's chief executive officer.
"This transaction will not only create a truly global business with
a world-class portfolio of tobacco and next-generation products,
but will also benefit from the highly talented and experienced
employees in both organizations. We believe that this will drive
long-term sustainable profit growth for the benefit of all
shareholders."
British American Tobacco has a strong track record of
successfully integrating acquisitions and remains committed to
Reynolds American's U.S. workforce and manufacturing
facilities.
The cash component of the transaction will be financed by a
combination of existing cash resources, new bank credit lines and
the issuance of new bonds. A $25bn
acquisition facility has been entered into with a syndicate of
banks to provide financing certainty. The acquisition facility
comprises $15bn and $5bn bridge loans with 1- and 2-year maturities
respectively, each with two six-month extensions available at BAT's
option. In addition, the facility includes two $2.5bn term loans with maturities of 3 and 5
years. BAT intends to refinance the bridge loans through capital
market debt issuances in due course.
The transaction is subject to shareholder approval from both
Reynolds American and BAT shareholders, as well as regulatory
approvals and other customary closing conditions. The transaction
is expected to close in the third quarter of 2017.
Weil, Gotshal & Manges LLP and Moore & Van Allen PLLC
are acting as legal counsel, and Goldman, Sachs & Co. is acting
as financial advisor to the Reynolds American transaction
committee.
Jones Day is acting as legal
counsel and J.P. Morgan Securities LLC and Lazard are acting as
financial advisors to Reynolds American Inc.
Conference Call and Webcast
RAI management will host a conference call and webcast to
discuss the transaction in greater detail before the market opens
on Jan. 17, 2017. Details of
the call are as follows:
Date and Time: Tuesday, Jan. 17,
2017, 8:00 a.m. Eastern
Time
Speakers:
|
Susan M. Cameron,
executive chairman
|
|
Debra A. Crew,
president and chief executive officer
|
|
Andrew D. Gilchrist,
chief financial officer
|
|
Robert W. Bannon,
vice president of investor relations
|
|
|
Call-in
Numbers:
|
(877) 201-0168
(toll-free)
|
|
(647) 788-4901
(international)
|
Webcast registration and access: The RAI conference call
will be available online on a listen-only basis in the Investors
section on our website at www.reynoldsamerican.com. Registration
will be available as of Jan. 17,
2017. All remarks made during the conference call will be
current at the time and will not be updated to reflect subsequent
material developments. A replay will be available on the
website.
While news media representatives will not be permitted to ask
questions during the call, they are welcome to monitor the remarks
on a listen-only basis.
TRANSACTION WEBSITE
For more information on the transaction, including investor
presentations and SEC filings, please visit
www.BATReynolds.transactionannouncement.com.
Web and Social Media Disclosure
RAI's website, www.reynoldsamerican.com, is the primary source
of publicly disclosed news, including quarterly earnings, for RAI
and its operating companies. RAI also uses Twitter to publicly
disseminate company news via @RAI News. It is possible that the
information we post could be deemed to be material information. We
encourage investors and others to register at
www.reynoldsamerican.com to receive alerts when news about the
company has been posted, and to follow RAI on Twitter at @RAI
News.
ABOUT REYNOLDS AMERICAN
Reynolds American Inc. (NYSE: RAI) is the parent company of R.J.
Reynolds Tobacco Company; Santa Fe Natural Tobacco Company, Inc.;
American Snuff Company, LLC; Niconovum USA, Inc.; Niconovum AB; and R.J. Reynolds
Vapor Company.
- R.J. Reynolds Tobacco Company is the second-largest U.S.
tobacco company.
R.J. Reynolds' brands include Newport, Camel and Pall Mall.
- Santa Fe Natural Tobacco Company, Inc. manufactures and markets
Natural American Spirit products in the
United States.
- American Snuff Company, LLC is the nation's second-largest
manufacturer of smokeless tobacco products. Its leading brands are
Grizzly and Kodiak.
- Niconovum USA, Inc. and
Niconovum AB market innovative nicotine replacement therapy
products in the United States and
Sweden, respectively, under the
ZONNIC brand name.
- R.J. Reynolds Vapor Company is a marketer of digital vapor
cigarettes, manufactured on its behalf by R.J. Reynolds, under the
VUSE brand name in the United
States.
Copies of RAI's news releases, annual reports, SEC filings and
other financial materials, including risk factors containing
forward-looking information, are available at
www.reynoldsamerican.com. To learn more about how Reynolds American
and its operating companies are transforming the tobacco industry,
visit Transforming Tobacco.
ABOUT BRITISH AMERICAN TOBACCO
BAT is a global tobacco group with brands sold in more than 200
markets. It employs more than 50,000 people worldwide and has over
200 brands in its portfolio, with its cigarettes chosen by around
one in eight of the world's one billion smokers. BAT has market
leading positions in at least 55 markets around the world. The
Group generated £5 billion adjusted profit from operations in
2015.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
Statements included in this communication that are not
historical in nature, including financial estimates and statements
as to regulatory approvals and the expected timing, completion and
effects of the proposed transaction, are forward-looking statements
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. When used in this
communication and in documents incorporated by reference,
forward-looking statements include, without limitation, statements
regarding the benefits of the proposed transaction, including
future financial and operating results, financial forecasts or
projections, the combined company's plans, expectations, beliefs,
intentions and future strategies, and other statements that are not
historical facts, and other statements that are signified by the
words "anticipate," "believe," "estimate," "expect," "intend,"
"may," "objective," "outlook," "plan," "project," "predict,"
"possible," "potential," "could," "should" and similar expressions.
These statements regarding future events or the future performance
or results of Reynolds American Inc. ("RAI") and its subsidiaries
or the combined company inherently are subject to a variety of
risks, contingencies and other uncertainties that could cause
actual results, performance or achievements to differ materially
from those described in or implied by the forward-looking
statements.
Among the risks, contingencies and uncertainties that could
cause actual results to differ from those described in the
forward-looking statements or could result in the failure of the
proposed transaction to be consummated, or if consummated, could
have an adverse effect on the results of operations, cash flows and
financial position of RAI or the combined company, respectively,
are the following: the failure to obtain necessary shareholder
approvals for the proposed transaction; the failure to obtain
necessary regulatory or other approvals for the proposed
transaction, or if obtained, the possibility of being subjected to
conditions that could reduce the expected synergies and other
benefits of the proposed transaction, result in a material delay
in, or the abandonment of, the proposed transaction or otherwise
have an adverse effect on RAI or the combined company; the failure
to satisfy required closing conditions or complete the proposed
transaction in a timely manner or at all; the effect of
restrictions placed on RAI's and its subsidiaries' business
activities and the limitations put on RAI's ability to pursue
alternatives to the proposed transaction pursuant to the merger
agreement; risks related to disruption of management time from
ongoing business operations due to the proposed transaction; the
failure to realize projected synergies and other benefits from the
proposed transaction; failure to promptly and effectively integrate
RAI into British American Tobacco p.l.c. ("BAT"); the uncertainty
of the value of the proposed transaction consideration that RAI
shareholders will receive in the proposed transaction due to a
fixed exchange ratio and a potential fluctuation in the market
price of BAT common stock; the difference in rights provided to RAI
shareholders under North Carolina
law, the RAI articles of incorporation and the RAI bylaws, as
compared to the rights RAI shareholders will obtain as BAT
shareholders under the laws of England and Wales and BAT's governing documents; the
possibility of RAI's and BAT's directors and officers having
interests in the proposed transaction that are different from, or
in addition to, the interests of RAI shareholders generally; the
effect of the announcement of the proposed transaction on the
ability to retain and hire key personnel, maintain business
relationships, and on operating results and businesses generally;
the incurrence of significant pre- and post-transaction related
costs in connection with the proposed transaction; evolving legal,
regulatory and tax regimes; and the occurrence of any event giving
rise to the right of a party to terminate the merger agreement.
Discussions of additional risks, contingencies and uncertainties
are contained in RAI's filings with the U.S. Securities and
Exchange Commission (the "SEC").
Due to these risks, contingencies and other uncertainties, you
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this communication.
Except as provided by federal securities laws, RAI is not under any
obligation to, and expressly disclaims any obligation, to update,
alter or otherwise revise any forward-looking statements, whether
written or oral, that may be made from time to time, whether as a
result of new information, future events or otherwise.
ADDITIONAL INFORMATION
This communication may be deemed to be solicitation material in
respect of the proposed transaction involving RAI and BAT. In
connection with the proposed transaction, BAT will file with the
SEC a registration statement on Form F-4 that will include the
proxy statement of RAI that also constitutes a prospectus of BAT.
RAI plans to mail the definitive proxy statement/prospectus to its
shareholders in connection with the proposed transaction. INVESTORS
AND SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS
AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BAT, RAI, THE
PROPOSED TRANSACTION AND RELATED MATTERS. Investors and
shareholders will be able to obtain free copies of the proxy
statement/prospectus and other documents filed with the SEC by RAI
and BAT through the SEC's web site at http://www.sec.gov. In
addition, investors and shareholders will be able to obtain free
copies of the proxy statement/prospectus and other documents filed
with the SEC by RAI, when available, by contacting RAI
Investor Relations at raiinvestorrelations@reynoldsamerican.com or
by calling (336) 741-5165 or at RAI's website at
www.reynoldsamerican.com, and will be able to obtain free copies of
the proxy statement/prospectus and other documents filed with the
SEC by BAT, when available, by contacting BAT Investor
Relations at batir@bat.com or by calling +44 (0) 20 7845 1000 or at
BAT'S website at www.bat.com.
RAI, BAT and their respective directors and executive officers
and other persons may be deemed to be participants in the
solicitation of proxies from RAI shareholders in respect of the
proposed transaction that will be described in the proxy
statement/prospectus. Information regarding the persons who may,
under the rules of the SEC, be deemed participants in the
solicitation of proxies from RAI shareholders in connection with
the proposed transaction, including a description of their direct
or indirect interests, by security holdings or otherwise, will be
set forth in the proxy statement/prospectus when it is filed with
the SEC. You may also obtain the documents that RAI files
electronically from the SEC's web site at http://www.sec.gov.
Information regarding RAI's directors and executive officers is
contained in RAI's Annual Report on Form 10-K for the year ended
December 31, 2015 and its Proxy
Statement on Schedule 14A, dated March 23,
2016, as supplemented, which are filed with the SEC.
Information regarding BAT's directors and executive officers is
contained in BAT's Annual Reports, which may be obtained free of
charge from BAT's website at www.bat.com.
This communication is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities in
any jurisdiction pursuant to the acquisition, the merger or
otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
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SOURCE Reynolds American Inc.