RJ Reynolds Tob (NYSE:RJR)
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RJR Shareholders Approve Proposed Combination of Reynolds Tobacco
and Brown & Williamson
WINSTON-SALEM, N.C., July 28 /PRNewswire-FirstCall/ -- During a special
meeting held today, the shareholders of R.J. Reynolds Tobacco Holdings, Inc.
(NYSE:RJR) voted to approve the proposed combination of R.J. Reynolds Tobacco
Company (RJRT) and the U.S. business of Brown & Williamson Tobacco Corp. (B&W).
The transaction is expected to close July 30.
Of the 61,401,184 shares voted, 98.77 percent voted in favor of the
combination.
"This vote demonstrates RJR shareholders' confidence in the value this business
combination brings to both the company's financial performance and competitive
position," said Andrew J. Schindler, chairman and CEO of RJR. "This transaction
will yield more than $500 million in annual operating efficiencies within the
next two years, and enable the new R.J. Reynolds Tobacco Co. to compete more
effectively in the U.S. cigarette market."
The agreement announced in October 2003 between RJR and B&W calls for the
creation of a new publicly traded holding company, Reynolds American Inc., with
approximately 150 million shares outstanding. Reynolds American will trade on
the New York Stock Exchange under the trading symbol RAI once the transaction
has closed.
Also as part of the transaction, RJR will pay $400 million in cash to acquire
the stock of Lane Limited, a British American Tobacco p.l.c. (AMEX:BTI)
subsidiary that manufactures several roll-your-own, pipe tobacco and little
cigar brands, and distributes Dunhill tobacco products
Once the transaction has closed, Reynolds American will have four operating
companies: R.J. Reynolds Tobacco Company, Lane Limited, Santa Fe Natural
Tobacco Company, and R.J. Reynolds Global Products, Inc. Existing RJR
shareholders will own approximately 58 percent of Reynolds American, through a
one-for-one exchange of their RJR stock for stock of the new company. Through
B&W, BAT will own about 42 percent of Reynolds American Inc. stock. The U.S.
Internal Revenue Service has confirmed that the transaction will be tax-free to
RJR shareholders and BAT under existing Federal tax law and regulations.
Schindler will serve as executive chairman of Reynolds American Inc. for a
six-month period after closing, and then become non-executive chairman. Susan
Ivey, currently president and CEO of B&W, will serve as president and CEO of
Reynolds American Inc. The company's headquarters and operations will be
consolidated in Winston-Salem, N.C.
On August 2, 2004, a conference call regarding R.J. Reynolds Tobacco Holdings,
Inc.'s second-quarter financial results and the creation of Reynolds American
Inc. will be webcast at 9:30 a.m. Eastern Daylight Time. The call will be
available online on a listen-only basis at http://www.rjrholdings.com/ .
Registration for the call is available on the Investors section of the site.
Cautionary Information Regarding Forward-Looking Statements
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 the
satisfaction or waiver of certain conditions contained in the business
combination agreement and related documents. 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.
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 Web site, http://www.rjrholdings.com/ .
DATASOURCE: R.J. Reynolds Tobacco Holdings, Inc.
CONTACT: Maura Payne of R.J. Reynolds Tobacco Holdings, Inc.,
+1-336-741-6996, or cell, +1-336-829-9024
Web site: http://www.rjrt.com/
http://www.rjrholdings.com/