RJR Shareholders Approve Proposed Combination of Reynolds Tobacco and Brown & Williamson
July 28 2004 - 10:25AM
PR Newswire (US)
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/
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