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May 26, 2015, 6:47 PM
- Reynolds American’s (NYSE:RAI) $27.4B purchase of Lorillard (NYSE:LO) wins approval from the FTC on the condition that the companies sell four cigarette brands - Winston, Kool, Salem and Maverick - to Imperial Tobacco (OTCQX:ITYBY, OTCPK:ITYBF), as expected.
- The FTC also says RAI will have to divest to Imperial the LO manufacturing facilities in Greensboro, N.C.
- The FTC, which spent nearly a year scrutinizing the deal, says it is satisfied the divestitures would restore market competition that would have been lost through the merger, with Imperial “positioned to be a sufficiently robust and aggressive competitor” to a combined RAI-LO and Altria (NYSE:MO).
- RAI, which owns the Camel and Pall Mall brands, will boost its market share to ~34% by acquiring LO and its Newport brand, the top-selling menthol cigarette; MO, owner of top brand Marlboro, leads the industry with a 47% share.
May 21, 2015, 4:34 PM
- Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO) are expected to receive antitrust clearance for their planned merger as soon as next week, with few changes in the companies' settlement, WSJ reports.
- RAI and LO have a financial interest in obtaining antitrust clearance and closing their deal by June 1: If they consummate the merger by then, they can save ~$240M LO would owe its shareholders in dividend payments if it remains a separate company after that date.
- To address antitrust concerns, the companies already agreed to sell $7.1B in cigarette brands, including Winston, Salem and Kool, along with other assets to U.K.-based Imperial Tobacco.
Apr. 2, 2015, 5:50 PM
- The WSJ reports the FTC is "considering possible settlement terms" that would allow Reynolds (NYSE:RAI) to go through with its $25B acquisition of Lorillard (NYSE:LO).
- Some FTC staffers have reportedly raised objections to a deal, which would combine the country's #2 and #3 cigarette makers (trailing Altria). But "other key figures within the commission believe the better approach would be to approve the merger with a binding legal settlement that includes divestitures."
- As it is, Reynolds/Lorillard have agreed to sell a slew of assets to Imperial Tobacco for $7.1B. The WSJ states it "isn't clear" if the FTC might want concessions beyond the Imperial deal.
- Shares of both companies rallied in regular trading ahead of the report, amidst a meeting with the FTC: Reynolds rose 4.4%, and Lorillard rose 2.8%.
Apr. 2, 2015, 1:10 PM
Mar. 30, 2015, 2:31 AM
- Following months of regulatory examination, Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO) are expected to meet this week with members of the Federal Trade Commission ahead of a final decision by the agency on whether to allow the companies to merge.
- When the two U.S. cigarette makers announced their $25B deal last July, they sought to address potential regulatory concerns about competition by selling $7.1B in brands and other assets to Imperial Tobacco (OTCQX:ITYBY).
Mar. 13, 2015, 5:55 PM
- Antitrust enforcers are asking detailed questions about business plans and leadership of a third company that plays a key role in Reynolds American’s (NYSE:RAI) proposed acquisition of Lorillard (NYSE:LO), WSJ reports.
- RAI and LO have sought to head off antitrust concerns by selling $7.1B in cigarette brands and other assets to U.K.-based Imperial Tobacco (OTCQX:ITYBY, OTCPK:ITYBF); the intent was to give Imperial a significant U.S. presence that could replace market competition previously provided by LO.
- The FTC’s review of the merger, now in its latter stages, is said to be examining whether Imperial can become a significant player in the U.S. market if the merger is approved.
Jan. 28, 2015, 9:44 AM
- Shareholders with Reynolds American (RAI +1.5%) have approved an issuance of shares in connection with the company's acquisition of Lorillard (LO +0.8%).
- The merger is still subject to regulatory approval.
- The company expects a closing in the first half of 2015.
- Reynolds American merger update (.pdf)
Jan. 26, 2015, 2:26 AM
- Reynolds (NYSE:RAI) Chief Executive Susan Cameron is confident shareholders will approve the Reynolds American and Lorillard (NYSE:LO) deal this Wednesday, which will combines the two to create a more formidable rival against Marlboro (NYSE:MO).
- Shareholders of Imperial Tobacco (OTCQX:ITYBY) (the third party which is expected to buy several brands of Reynolds American as part of the deal) are also expected to approve the transaction because it turns Imperial into the No. 3 player in the U.S.
- However, the real test for the merger and the related divestiture of brands will come later this quarter, when the FTC weighs in on deal.
- Previously: The FTC asks Reynolds American and Lorillard for more info on merger (Aug. 29 2014)
Dec. 11, 2014, 10:38 AM
- RBC Capital Markets picks Reynolds American (RAI) as its top tobacco stock for 2015.
- Though some regulatory hurdles remain to be cleared with the Lorillard (LO +0.8%) merger, the investment firm thinks the combined company will provide immediate value for shareholders.
- The last word from Reynolds was that it expected the merger to close in the first half of 2015.
Nov. 21, 2014, 7:48 AM
Sep. 26, 2014, 9:50 AM
- Lorillard (LO) trades more than 10% below the acquisition price that Reynolds American (RAI -0.2%) has offered up for the company in what some analysts think makes for an enticing short-term bet for investors.
- "The market is mispricing the probability that the deal closes," says Morningstar analyst Philip Gorham.
- The Lorillard trade isn't without some risk, shares could tumble as much 20% if a deal gets scuttled.
Sep. 2, 2014, 2:18 AM
- Imperial Tobacco (OTCQX:ITYBY) has closed approximately $13B of loans to finance its acquisition of several brands and assets of Reynolds American (NYSE:RAI).
- The financing covers the $7.1B acquisition of cigarette brands, Winston, Maverick, Kool, Salem and blu, which Reynolds wished to unload to clear the way for its merger with Lorillard (NYSE:LO).
- As part of the purchase, Imperial will also take over Lorillard's national sales force, offices and production facilities.
Jul. 15, 2014, 7:22 AM
- Reynolds American (NYSE:RAI) says it will unload the Kool, Salem, Winston, Maverick, and blu eCigs brands along with some other assets to Imperial Tobacco (OTCMKTS:ITYBY) for $7.1B. The move is aimed at appeasing regulators.
- The company says the acquisition of Lorillard (NYSE:LO) will be accretive within the first full year and will show a double-digit accretion rate in the second year and beyond.
- A cooperation deal was struck between Reynolds and British American Tobacco (NYSEMKT:BTI) which includes sharing technology and development costs on next-gen tobacco products.
- Premarket: Lorillard -3.7%, Reynolds American -0.2%, British American Tobacco (BTI) -0.5%.
Jul. 15, 2014, 7:14 AM
- Reynolds American (NYSE:RAI) announces it will buy Lorillard (NYSE:LO) in a deal valued at $27.4B.
- Lorillard shareholders will receive $50.50 in cash and 0.2909 a share of Reynold at closing, which reps a deal price of $68.88 at Reynold's current trading level.
- British American Tobacco (NYSEMKT:BTI) will hold on to its 42% stake in Reynolds as part of the deal.
Jul. 11, 2014, 7:18 AM
- Shares of Lorillard (LO) are higher in early trading after Reynolds American (RAI) confirms an earlier report that it's in talks with the company over a buyout.
- Reynolds says British American Tobacco will support the transaction by subscribing additional shares.
- Imperial Tobacco (ITYBY) will snap up key brands to help make the deal more likely to sail past regulators.
- LO +4.6% premarket
Jul. 11, 2014, 4:13 AM
- Reynolds American (RAI) may announce its purchase of Lorillard (LO) as early as July 14, Bloomberg reports.
- Many rumors have been circulating in the past few weeks regarding big tobacco M&A, as shrinking U.S. demand for cigarettes puts pressure on companies to team up.
- Under the current deal, Reynolds would acquire most of Lorillard, with some brands being acquired by Imperial Tobacco (ITYBY), to receive regulatory approval. British American Tobacco (BTI), who owns a 42% in Reynolds, is said to have already given the company the go-ahead for the purchase.
- The new report conflicts with another rumor heard this week stating British American Tobacco will buy the 58% of Reynolds American it doesn't already own - cancelling any possible deal with Lorillard.
Lorillard Inc is engaged in the manufacture of cigarettes and tobacco in the United States. The Company's principal products are marketed under the brand names of Newport, Kent, True, Maverick and Old Gold with sales in the United States of America.
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