Thu, Jun. 25, 9:02 AM| Thu, Jun. 25, 9:02 AM | 3 Comments
Tue, Jun. 16, 9:08 AM
- Goldman Sachs calls Reynolds American (NYSE:RAI) the "best in class" in the tobacco sector following the company's merger with Lorillard.
- Reynolds American lands on the Conviction Buy List at Goldman due to its upside potential after clearing the regulatory hurdles associated with the Lorillard integration.
- Despite being forced to shed some brands, Reynolds is seen having better pricing power due to its larger market share.
- GS assigns Reynolds a price target of $81 based off a blended assumption of 17.5X 12-24 month P/E and M&A EBITDA gains.
- RAI +1.0% premarket t0 $73.29.
Tue, Jun. 16, 7:06 AM
- A report published in the latest issue JAMA Internal Medicine concludes smoking may account for a wider range of health problems than previously identified.
- The study linked cancers in other parts of the body to smoking, including colon and bladder cancer.
- Researchers noted the percentage of smokers in the U.S. decreased to 18.1% in 2012 from 23.2% in 200.
- Tobacco stocks: LO, PM, MO, VGR, RAI, OTCQX:ITYBY, BTI, OTCPK:BTAFF, OTC:BATMF, OTCPK:JAPAF, OTCPK:JAPAY.
- Full JAMA Internal Medicine report
Tue, Jun. 9, 1:02 PM
- Reynolds American (RAI +1.8%) is offering a seven-part bond deal in order to fund its acquisition of Lorillard (LO +0.5%).
- The $9B bond sale will be one of the larger corporate offerings seen this year in the U.S.
- The development in the bond market isn't being ignored by Moody's which downgraded the tobacco company's senior unsecured rating to Baa3 on a Stable outlook.
- "The downgrade reflects our expectation of much higher leverage as a result of the transaction, as well as execution risk in achieving synergies in a timely fashion," summarizes Moody's.
Mon, Jun. 8, 12:59 PM
- Reynolds American (RAI -1.5%) announces its deal to acquire Lorillard (LO) will close on June 12.
- The company is able to move forward after a federal judge approved a plan to divest the Maverick, Kool, Salem, and Winston cigarette brands to Imperial Tobacco Group (OTCQX:ITYBY, OTCPK:ITYBF) for $7.1B.
Fri, Jun. 5, 8:09 AM
- Reynolds American (NYSE:RAI) announces it will begin exchanging notes and consent solicitations for senior notes of Lorillard (NYSE:LO) in advance of the merger between the companies.
- The major impact of the tobacco industry merger is that the new combined entity will stand as the second largest tobacco company behind Altria (NYSE:MO) and strengthen Imperial Tobacco's (OTCQX:ITYBY, OTCPK:ITYBF) position in the U.S. after it picks up some divested brands.
Tue, May 26, 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.
Fri, May 22, 7:11 PM
- Philip Morris International (NYSE:PM) and British American Tobacco (NYSEMKT:BTI) are suing the British government over new rules starting next May that would require cigarettes to be sold in plain packages.
- The tobacco industry is alarmed over a growing international move toward laws mandating that colorfully branded cigarette boxes be replaced with drab, uniform packages displaying prominent health warnings.
- Separately, a U.S. appeals court today issued a split ruling on what kinds of statements tobacco companies must make in product warnings after a judge found them in violation of federal law nearly a decade ago.
- Defendants included Altria (NYSE:MO), Reynolds American (NYSE:RAI) and Lorillard (NYSE:LO), which have battled with the Justice Department and public health advocates over the exact wording of the warning statements; today's ruling could further delay the date when any such warnings appear in public.
Thu, May 21, 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.
Thu, May 21, 9:30 AM
- Alongside Goldman's list of 50 stocks appearing most as top holdings at hedge funds is its list of the 50 top shorts.
- New additions this quarter: Baxter Intl (NYSE:BAX), UPS, Marriott (NASDAQ:MAR), NextEra (NYSE:NEE), Ford (NYSE:F), National Oilwell Varco (NYSE:NOV), McDonald's (NYSE:MCD), M&T Bank (NYSE:MTB), CenturyLink (NYSE:CTL), Amgen (NASDAQ:AMGN), Pioneer Natural (NYSE:PXD), Duke Energy (NYSE:DUK), Seagate (NASDAQ:STX), AbbVie (NYSE:ABBV), Cisco (NASDAQ:CSCO).
- The full list (in order of $ value of short interest): AT&T (NYSE:T), Disney (NYSE:DIS), IBM, Verizon (NYSE:VZ), Intel (NASDAQ:INTC), Kinder Morgan (NYSE:KMI), Exxon (NYSE:XOM), Pfizer (NYSE:PFE), J&J (NYSE:JNJ), Deere (NYSE:DE), Caterpillar (NYSE:CAT), Exelon (NYSE:EXC), GE, Boeing (NYSE:BA), Halliburton (NYSE:HAL), Fox (NASDAQ:FOXA), Comcast (NASDAQ:CMCSA), UTX, Regeneron (NASDAQ:REGN), Merck (NYSE:MRK), salesforce.com (NYSE:CRM), AbbVie (ABBV), Conoco (NYSE:COP), Wal-Mart (NYSE:WMT), Eli Lilly (NYSE:LLY), Celgene (NASDAQ:CELG), Schlumberger (NYSE:SLB), AutoZone (NYSE:AZO), Wells Fargo (NYSE:WFC), Emerson (NYSE:EMR), McDonald's (MCD), Reynolds (NYSE:RAI), Target (NYSE:TGT), Accenture (NYSE:ACN), Coca-Cola (NYSE:KO).
Thu, May 7, 6:04 PM
Fri, Apr. 17, 8:27 AM
- E-cigarettes are catching on with teenagers, according to a new data read.
- While usage of traditional cigarettes by high school students has declined, e-cigarette demand has increased significantly.
- 13% of all high school students used e-cigs last year to top the rate they used traditional cigarettes for the first time.
- The FDA is still working out how it will treat the e-cigarette category.
- Related stocks: MO, BTI, LO, PM, OTCQB:ECIG, OTCQB:VAPE, OTCPK:HPNN, OTCQB:MCIG, OTCQB:NTRR, OTCPK:VAPR, RAI, OTC:AHII, OTCQX:ITYBY.
Fri, Apr. 17, 7:30 AM
- Reynolds American (NYSE:RAI) reports cigarette volume fell 2.4% to 13.9B in Q1 vs. +0.5% industry average.
- Cigarette market share -50 bps to 26.1%.
- Premium mix +30 bps to 58.7%.
- SG&A expenses +23.73% Y/Y to $511M.
- Operating margin rate increased 280 bps to 37.2%.
- FY2015 Guidance: Adjusted EPS: $3.65 to $3.80.
- RAI +1.70% premarket.
Fri, Apr. 17, 7:01 AM
Thu, Apr. 16, 5:30 PM
Fri, Apr. 10, 10:22 AM
- Lorillard (LO +2%) and Reynolds American (RAI +2.4%) break higher on renewed chatter the FTC will decide against a lawsuit to halt the merger between the companies.
- Earlier today, Reynolds American announced it will host its earnings conference call on April 17 at which time more details on the merger and synergy estimates could be disclosed.
- Lorilalrd trades at an all-time high, while Reynolds American is only a dollar and change from a 52-week top.
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