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RJR, B&W Complete Transaction; Reynolds American Inc. Established
WINSTON-SALEM, N.C., July 30 /PRNewswire-FirstCall/ -- R.J. Reynolds Tobacco
Holdings, Inc. (RJR) and Brown & Williamson Tobacco Corporation (B&W) today
completed the transaction that formed a new publicly traded company, Reynolds
American Inc. (NYSE:RAI), and combined their respective U.S. tobacco
businesses.
"The closing of this transaction marks a major milestone for R.J. Reynolds and
Brown & Williamson," said Andrew J. Schindler, executive chairman of Reynolds
American. "Reynolds American will be both financially and operationally
stronger, and in an excellent position to provide attractive returns to
shareholders."
"Completing this deal on the terms proposed last October and in line with the
anticipated timetable is the result of a remarkable collaborative effort by
people on both sides of the Atlantic," said Jan du Plessis, chairman of British
American Tobacco p.l.c. (AMEX:BTI). "I would like to thank them for all their
tremendous work on behalf of our shareholders, for whom the transaction is
expected to be earnings and cash flow enhancing in 2005."
Susan Ivey, president and CEO of Reynolds American, said, "Today we realized a
tremendous opportunity in creating a brand new company with over 200 years of
combined experience and innovation. We have an excellent leadership team and a
new board that will bring invaluable insight and advice to our company. The
integration teams have done a terrific job over the last eight months in
putting together the best practices, processes and talent in the new
organizations. Reynolds American is ready to execute on day one.
"We will now focus our attention on creating a new business model and
brand-portfolio strategy that will enable R.J. Reynolds Tobacco to enhance its
competitive position in the U.S. market and continue to return value to
shareholders," she continued. "And we remain confident that we can do so while
realizing more than $500 million in annual synergies within the next two
years."
Reynolds American common stock will begin trading on the New York Stock
Exchange on August 2, 2004. Based on the 2003 results of its four operating
subsidiaries - R.J. Reynolds Tobacco Company, Santa Fe Natural Tobacco Company,
Inc., Lane Limited and R.J. Reynolds Global Products, Inc. - Reynolds American
Inc. would have annual sales of $8.4 billion and volume of approximately 172
billion units (including contract manufacturing). The company will have
approximately 8,100 employees and be headquartered in Winston-Salem, N.C.
Following are other highlights of the transactions completed today:
* Existing RJR shareholders own approximately 58 percent of Reynolds
American common stock through a tax-free one-for-one exchange.
* Through B&W, BAT owns about 42 percent of the approximately 150 million
shares of Reynolds American common stock.
* Reynolds American Inc.'s board of directors will have 13 members. In
addition to Schindler and Ivey, members will include six independent
directors of the former RJR board and five directors designated by the
BAT Group (three independent and two BAT executives).
* R.J. Reynolds Tobacco Company's newly broadened portfolio of iconic
cigarette brands includes five of the top 10 U.S. brands. Reynolds
Tobacco manufactures about one of every three cigarettes sold in the
United States.
* RJR paid BAT $400 million in cash for Lane Limited, a Georgia-based
company that manufactures several roll-your-own, pipe tobacco and
little cigar brands, and distributes Dunhill tobacco products.
A conference call will be webcast on Monday, Aug. 2, 2004, at 9:30 a.m. Eastern
Daylight Time following the release that morning of the second-quarter
financial results of R.J. Reynolds Tobacco Holdings, Inc. Members of the new
Reynolds American management team will be on the call to discuss RJR's second-
quarter results, provide an update on the integration of the tobacco operating
companies, and discuss initial plans for Reynolds American. The conference
call will be available online on a listen-only basis at
http://www.rjrholdings.com/ .
Cautionary Information Regarding Forward-Looking Statements
Statements included in this news release that 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 RAI'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 RAI
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 deep-discount brands; 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;
the ability to realize the benefits and synergies arising from the combination
of RJR Tobacco and the U.S. cigarette and tobacco business of B&W; any
potential costs or savings associated with realigning the cost structure of RAI
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 and the return on
corporate cash; and the ratings of RAI securities. 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, RAI is not required to publicly update or
revise any forward- looking statement, whether as a result of new information,
future events or otherwise.
DATASOURCE: Reynolds American Inc.
CONTACT: Maura Payne of R.J. Reynolds Tobacco Holdings, Inc.,
+1-336-741-6996; or Dave Betteridge, 011-044-207-845-2888, or Ralph Edmondson,
011-044-207-845-1180, both of Brown & Williamson Tobacco Corporation
Web site: http://www.rjrholdings.com/