Lawsuit targets BAT’s role in Reynolds deal
The plaintiff in a lawsuit targeting Reynolds American Inc.’s $27.4 billion offer for Lorillard Inc. wants the deal blocked, saying that British American Tobacco (BAT) is protecting its 42 percent Reynolds stake at the expense of public shareholders.
The Beatrice Corwin Living Irrevocable Trust is suing Reynolds, its board — which includes top executive Susan Cameron — and BAT for breach of fiduciary duty in the deal announced July 15, according to an article in the Winston-Salem Journal. The plaintiff accuses Reynolds’ board of directors of agreeing to the new BAT investment, along with a “joint technology-sharing strategy for next-generation products,” as a means of keeping BAT from taking majority ownership of the company. A 10-year moratorium on BAT acquiring additional Reynolds stock ended July 30.
The plaintiff says the non-BAT directors wanted Reynolds to remain independent in order to keep their director seats that paid in fiscal 2013 between $90,000 and $378,000 (for Chairman Thomas Wajnert) in cash fees and between $229,880 and $459,760 (Wajnert) in stock awards.
“The threat of a complete takeover gave BAT additional leverage to impose its terms on the Reynolds board during those negotiations,” according to the complaint.
The lawsuit was filed Aug. 8 in Guilford County Superior Court and was moved Aug. 12 to the N.C. Business Court. The plaintiff wants class-action status and a jury trial.