Aug. 6, 2014, 10:00 AM
- Tobacco stocks are higher today in what analysts are calling a defensive move by investors.
- There's also been some stronger pricing trends on the lower-end of the cigarette market that has helped to boost the outlook on the group.
- Gainers: Philip Morris (PM +2.2%), Reynolds American (RAI +1.6%), Vector Group (VGR +1.4%), and Altrai (MO +1.9%).
Jul. 29, 2014, 8:52 AM
- Reynolds American (NYSE:RAI) reports cigarette shipments fell 8.3% Y/Y in Q2 - mark which was worse than the industry average of a 5.5% volume drop.
- Though the Camel and Pall Mall brands made market share gains, overall Reynolds lost 10 bps of share to 26.5%.
- The Vuse roll-out began during the quarter and by the end of the period over 21K retail outlets sold the e-cig product.
- The company tightened its guidance to a range of $3.35-$3.45 vs. $3.30-$3.45 prior.
- RAI -0.7% premarket
Jul. 29, 2014, 7:51 AM| Comment!
Jul. 21, 2014, 4:12 AM
- The R.J. Reynolds (NYSE:RAI) lawsuit awarding $23.6B in punitive damages to the widow of a longtime smoker who died of lung cancer is likely to be rejected on appeal or the award reduced substantially, Reuters reports.
- The payment likely falls outside the boundaries for punitive damages that the U.S. Supreme Court has laid down in a series of cases.
- Constitutional guarantees of due process do not usually allow punitive damages to exorbitantly exceed compensatory damages of the same case. The general guideline is a ratio of 10:1.
Jul. 20, 2014, 9:52 AM
- Reynolds American's (NYSE:RAI) subsidiary, R.J. Reynolds, has been slammed with $23.6B in punitive damages and $16.8M in compensatory damages from a lawsuit filed by the widow of a longtime smoker who died of lung cancer.
- The lawsuit was filed six years ago after a Florida Supreme Court ruling stated that smokers and their families need only prove that addiction and smoking caused their illnesses or deaths to be eligible for damage payments.
- The record ruling was re-approved last year, making it easier for sick smokers and their survivors to sue tobacco companies, and triggered thousands of new court cases.
- R.J. Reynolds VP and assistant general counsel J. Jeffery Raborn intends to fight the verdict, calling it grossly excessive and unconstitutional. "This verdict goes far beyond the realm of reasonableness and fairness, and is completely inconsistent with the evidence presented," says Raborn. "We plan to file post-trial motions with the trial court promptly, and are confident that the court will follow the law and not allow this runaway verdict to stand."
Jul. 15, 2014, 10:53 AM
- Tobacco stocks slump as a group after Lorillard doesn't catch the premium in the Reynolds American buyout that some anticipated.
- Even Imperial Tobacco which ended up with the hot Blu e-cigarette brand as part of the deal is having trouble shaking off the pessimism.
- Decliners: Lorillard (NYSE:LO) -7.9%, Philip Morris (NYSE:PM) -1.3%, Altria (NYSE:MO) -2.1%, Vector Group (NYSE:VGR) -0.8%, Reynolds American (NYSE:RAI) -4.0%, Imperial Tobacco (OTCMKTS:ITYBY) -2.8%, British American Tobacco (NYSEMKT:BTI) -1.4%.
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. 14, 2014, 7:59 AM
- The reduced pace of smoking lawsuits is helping to stoke up M&A activity in the tobacco sector, according to analysts.
- Reynolds American (NYSE:RAI) disclosed in a recent SEC filing that it faced 5K Engle-related suits in Q1 of 2014, well-off the high litigation pace of a few years ago.
- The clearer visibility on liability in the sector should help push forward deals which a few years ago would have stalled.
- Lorillard (NYSE:LO) is +0.7% to $66.48 in premarket trading.
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.
Jul. 9, 2014, 8:16 AM| 3 Comments
Jul. 9, 2014, 8:06 AM
- There's growing speculation in the U.K. that British American Tobacco (BTI) will buy out the 58% of Reynolds American (RAI) it doesn't own already.
- A deal would likely end the pursuit by Reynolds of Lorillard (LO) which has been in the works for weeks.
- Shares of Lorillard (LO) are down 3.7% premarket, while Reynolds American (RAI) is 2.1% higher.
Jul. 3, 2014, 10:18 AM
- Shares of Lorillard (LO +4.6%) are higher after CNBC reports its sources indicate a merger of the company with Reynold American (RAI +1.6%) will be announced within weeks.
- In the deal sidecar: Imperial Tobacco (ITYBY) is expected to buy some assets in order to make the deal palatable for regulators, while British American Tobacco (BTI) is tapped to be part of the festivities as an investor in Reynolds.
Jun. 30, 2014, 6:51 AM
- A move by Imperial Tobacco (ITYBY) to sell off 30% of its holdings in Compania de Distribucion Integral Logista Holdings SA could make it easier for tobacco giants Lorillard (LO) and Reynolds American (RAI) to merge.
- Imperial Tobacco would sit with close to $800M in extra cash if it unloaded the piece in its Madrid unit.
- Shares of both Lorillard and Reynolds are up over 20% since merger talk ramped up a few months ago.
Jun. 24, 2014, 3:51 AM
- The $96B tobacco bond market is continuing its decline, as most Americans have quit smoking at a faster rate than estimated when most of the bonds were sold in previous decades. Health risks, public smoking bans, e-cigs and new excise taxes have all been factors in the decrease.
- A forecast last month from Moody's Investors Service estimates 65-80% of tobacco bonds are headed toward default, and many analysts predict the default to occur by the end of the decade.
- Cigarette consumption fell an annual average of 3.4% since 2000, while many bonds were set up to only withstand drops of 2-3%. E-cigarettes have also diminished market share, with sales growing by more than $2.2B in the last four years.
- Related tickers: (MO) (BTI) (LO) (PM) (ECIG) (VAPE) (HPNN) (MCIG) (NTRR) (VAPR) (VPCO) (RAI) (AHII)
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