RJ Reynolds Tob (NYSE:RJR)
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IRS Issues Favorable Ruling on Pending Merger of Reynolds Tobacco
and Brown & Williamson
WINSTON-SALEM, N.C., June 22 /PRNewswire-FirstCall/ -- R.J. Reynolds Tobacco
Holdings, Inc. (NYSE:RJR) announced today that its R.J. Reynolds Tobacco Co.
(RJRT) subsidiary and Brown & Williamson Tobacco Corp. (B&W) have received
favorable private-letter rulings from the Internal Revenue Service in
connection with the proposed combination of RJRT and the U.S. business of B&W.
The IRS rulings confirm that the proposed combination of those companies' U.S.
businesses will be tax-free to RJR shareholders and B&W's parent company,
British American Tobacco p.l.c. (AMEX:BTI), under existing Federal tax law and
regulations. The agreement between RJR and British American Tobacco (BAT) to
combine RJRT and B&W provides for establishing a new publicly traded holding
company called Reynolds American Inc., which will become the parent company of
the newly combined RJRT and B&W U.S. businesses.
In addition, Reynolds American Inc. will pay $400 million in cash to acquire
Lane Limited, which manufactures several cigar, roll-your-own and pipe tobacco
brands and distributes Dunhill tobacco products. Reynolds American Inc. will
have approximately 150 million shares outstanding. Under the agreement, BAT
will own 42 percent of Reynolds American Inc. stock, with existing RJR
shareholders owning 58 percent through a one-for-one exchange for stock of the
new company.
As the company has previously stated, other key rulings and approvals that are
necessary prior to closing the transaction include clearance by the U.S.
Federal Trade Commission (FTC), clearance by the Securities and Exchange
Commission (SEC) of the proxy statement/prospectus for RJR shareholders, and
RJR shareholder approval.
Reynolds Tobacco is the second-largest U.S. cigarette manufacturer and
marketer. RJRT's key brands include Camel, Salem, Winston and Doral. Brown &
Williamson is the third-largest domestic cigarette company. B&W's brands
include KOOL, Pall Mall, Lucky Strike and Misty.
Forward-Looking Information
Statements included in this news release which are not historical in nature are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward- looking statements
regarding RJR's future performance and financial results include risks and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements. These risks include the
substantial and increasing regulation and taxation of the cigarette industry;
various legal actions, proceedings and claims relating to the sale,
distribution, manufacture, development, advertising, marketing and claimed
health effects of cigarettes that are pending or may be instituted against RJR
or its subsidiaries; the substantial payment obligations and limitations on the
advertising and marketing of cigarettes under various litigation settlement
agreements; the continuing decline in volume in the domestic cigarette
industry; competition from other cigarette manufacturers, including increased
promotional activities and the growth of the deep-discount category; the
success or failure of new product innovations and acquisitions; the
responsiveness of both the trade and consumers to new products and marketing
and promotional programs; any potential costs or savings associated with
realigning the cost structure of RJR and its subsidiaries; the ability to
achieve efficiencies in manufacturing and distribution operations without
negatively affecting sales; the cost of tobacco leaf and other raw materials
and commodities used in products; the effect of market conditions on the
performance of pension assets, foreign currency exchange rate risk, interest
rate risk and the return on corporate cash; and the ratings of RJR securities.
In addition, RJR can give no assurance that the proposed formation of Reynolds
American Inc., the combination of RJRT and the U.S. assets, liabilities and
operations of B&W, and the related transactions, will be consummated, or if
consummated, that any expectations relating thereto will be realized. Factors
that could affect whether these transactions are consummated include obtaining
clearances from the FTC and the SEC, the approval of RJR shareholders and the
satisfaction or waiver of certain other conditions. Due to these uncertainties
and risks, undue reliance should not be placed on these forward- looking
statements, which speak only as of the date of this news release. Except as
provided by federal securities laws, RJR is not required to publicly update or
revise any forward-looking statement, whether as a result of new information,
future events or otherwise.
Additional Information and Where To Find It
Reynolds American Inc., the holding company formed in connection with the
proposed business combination, has filed a registration statement on Form S-4
that includes a preliminary proxy statement/prospectus and other relevant
documents in connection with the proposed business combination. When the
registration statement becomes effective, a final proxy statement/prospectus
and other relevant documents will be mailed to RJR shareholders. INVESTORS AND
SECURITY HOLDERS OF RJR ARE URGED TO READ THESE DOCUMENTS WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
BUSINESS COMBINATION. Documents filed by RJR and Reynolds American Inc. with
the SEC can be found at the SEC's Web site at http://www.sec.gov/ . Once
available, free copies of the final prospectus/proxy statement, as well as
RJR's and Reynolds American Inc.'s related filings with the SEC, also may be
obtained from RJR by directing a request to R.J. Reynolds Tobacco Holdings,
Inc. at P.O. Box 2866, Winston-Salem, NC 27102-2866, Attn.: Office of
Investor Relations, or by telephone at (336) 741-5165 or on RJR's Web site,
http://www.rjrholdings.com/ .
Interests of Participants
RJR, its directors and executive officers and certain other members of
management and employees may be deemed to be participants in the solicitation
of proxies from RJR shareholders in favor of the proposed business combination.
A description of the interests of the directors and executive officers of RJR
is set forth in the prospectus/proxy statement and the other relevant documents
filed with the SEC.
R.J. Reynolds Tobacco Holdings, Inc. is the parent company of R.J. Reynolds
Tobacco Company and Santa Fe Natural Tobacco Company, Inc. R.J. Reynolds
Tobacco Company is the second-largest tobacco company in the United States,
manufacturing about one of every five cigarettes sold in the United States.
Reynolds Tobacco's product line includes four of the nation's 10 best-selling
cigarette brands: Camel, Winston, Salem and Doral. Santa Fe Natural Tobacco
Company, Inc. manufactures Natural American Spirit cigarettes and other tobacco
products, and markets them both nationally and internationally. Copies of
RJR's news releases, annual reports, SEC filings and other financial materials
are available on the company's website, http://www.rjrholdings.com/ .
DATASOURCE: R.J. Reynolds Tobacco Holdings, Inc.
CONTACT: Jan Smith, +1-336-741-6995, or cell, +1-336-829-9258, or Maura
Payne, +1-336-741-6996, or cell, 336829-9024, both of R.J. Reynolds Tobacco
Holdings, Inc.
Web site: http://www.rjrholdings.com/