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Sep. 15, 2015, 1:00 PM
- The FDA issued orders today that will stop the sale and distribution of four cigarette brands from R.J. Reynolds (RAI -0.4%): Camel Crush Bold, Pall Mall Deep Set Recessed Filter, Pall Mall Deep Set Recessed Filter Menthol and Vantage Tech 13. According to the agency, it took action because the company's submissions for the products did not meet the requirements set forth in the Federal Food, Drug and Cosmetics Act.
- Specifically, the FDA's evaluation found that the products were not substantially equivalent (NSE) to their respective "predicate" products (commercially available as of February 15, 2007) as specified by the company. The agency concluded that the products have different characteristics than the predicate products and Reynolds failed to show that the new products do not raise different questions of public health when compared to them.
- The four products entered the market during a provisional period established by the Family Smoking Prevention and Tobacco Control Act of 2009. The provision specified that the company had to submit a substantial equivalence (SE) application to the FDA by March 22, 2011 in order for the products to remain on the market.
- The scientific basis for the action include a failure to demonstrate that increased yields of harmful or potentially harmful constituents, higher levels of menthol and/or the addition of new ingredients versus the predicates do not raise different questions of public health.
- The NSE order means that it is illegal to sell or distribute the products in interstate commerce, including products currently in inventory.
- Related tickers: (MO +2.3%)(BTI +0.9%)(LO)(PM +1%)
Sep. 14, 2015, 9:14 AM
- Reynolds American (NYSE:RAI) announces it was named to be included in the Dow Jones Sustainability Index for 2015-2016.
- The index includes 145 companies meeting criteria on energy policies and climate change strategies.
Sep. 12, 2015, 10:27 AM
- There's a different approach to electronic cigarettes developing in the U.S. and U.K.
- Health advocates in the U.S. continue to raise concerns on the impact on teenagers, including a damaging article in JAMA Pediatrics, and politicians are eyeing taxing the product. No great surprise, but Chicago and New York are out in front of the e-cig tax movement.
- U.S. sales have been held back a bit by efforts to demonize the product, according to some company officials.
- The reception in the U.K. to the burgeoning e-cig industry has been warmer. A government health body determined last month that e-cigarettes could be prescribed by doctors in the nation as an effective way to help smokers break their addiction.
- A study by the same group estimated e-cigs are 95% less harmful than traditional cigarettes and found no evidence the product acts as a gateway to smoking for children or non-smokers. That last part was also backed up in a concise breakdown by FiveThirtyEight.com.
- Related stocks: MO, BTI, LO, PM, OTCPK:ECIG, OTCQB:VAPE, OTCPK:HPNN, OTCQB:MCIG, OTCQB:NTRR, OTCPK:VAPR, RAI, OTC:AHII, OTCQX:ITYBY, OTCPK:VTCQ, VPCO, BTI, OTCQX:ITYBY, OTCPK:JAPAY.
Sep. 11, 2015, 8:04 AM| Sep. 11, 2015, 8:04 AM
Sep. 3, 2015, 10:38 AM
- There's a significant windfall for Big Tobacco in place with the expiration of the Tobacco Transition Payment Program.
- The government program designed to compensate tobacco farmers cut into industry revenue by $9.6B over the last ten years.
- USA Today dissected the potential benefit by company.
- Altrai (NYSE:MO): The cigarette maker kicked out $1.1B of the final three years of the program, including $300M last year.
- Reynolds American (NYSE:RAI): Payments of $583M were made between 2012 and 2014.
- Lorillard (part of RAI): The company paid out $330M for the tax over the last three years.
- Tobacco executives have been asked about the extra cash during recent conference calls, but kept their answers on the vague side.
Aug. 27, 2015, 2:01 PM
- Reynolds American (RAI +1.6%) and Imperial Tobacco (OTCQX:ITYBY, OTCPK:ITYBF) have received a warning from the FDA over advertising.
- The agency says the companies need to prove that cigarette brands labeled as "natural" or "additive-free" are lower risk to consumers than traditional cigarettes.
- Reynolds and Imperial have 15 days to respond to the directive.
Jul. 28, 2015, 7:09 AM
- Reynolds American (NYSE:RAI) reports domestic cigarette volume increased 5.6% in Q2.
- Domestic retail market share improved 20 bps to 33.6% during the quarter.
- Adjusted operating margin was up 470 bps to 42.1%.
- The company says the deleveraging the balance sheet will be a top priority after its bond offering related to the Lorillard purchase.
- Guidance: Reynolds increase full-year EPS guidance to $1.90-$2.00 vs. $1.83-$1.90 prior.
- Earnings release (.pdf)
- Previously: Reynolds American beats by $0.05, misses on revenue
Jul. 28, 2015, 7:06 AM
- Reynolds American (NYSE:RAI): Q2 EPS of $1.02 beats by $0.05.
- Revenue of $2.4B (+11.1% Y/Y) misses by $50M.
Jun. 25, 2015, 9:02 AM
- Reynolds American (NYSE:RAI) issues an update on the private exchange offers of Lorillard notes in relation to the merger between the tobacco firms.
- All debt housekeeping steps have proceeded as scheduled.
- Shares of RAI hit an all-time high last week as sentiment remains high on merger benefits.
Jun. 16, 2015, 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.
Jun. 16, 2015, 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
Jun. 9, 2015, 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.
Jun. 8, 2015, 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.
Jun. 5, 2015, 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.
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 22, 2015, 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.
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