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BAT linked with possible RAI acquisition and both linked with Lorillard deal

| July 10, 2014

British American Tobacco could be on the verge of acquiring Reynolds American Inc., according to a story by Geoff Foster for This is Money’s Market Report.

BAT’s shares, Foster noted, had fallen by 19.5 pence to 3555.5 pence amid growing speculation it was ready to splash out billions of pounds buying the 58 percent of RAI it doesn’t already own.

In making such an acquisition, he added, BAT would stub out any plans RAI might have had to buy Lorillard.

A standstill agreement between BAT and RAI expires at the end of this month, at which point BAT will be free to bid to raise its 42 percent share.

Foster said that RAI’s shares traded at about $61.40 in New York early on July 8 and that rumors were rife that BAT could be willing to pay more than $75 a share to gain full control.

Broker Citigroup has said it would be advantageous for BAT to buy RAI since the deal would boost BAT’s earnings per share by about 10–13 percent, give it ownership of one of the best e-cigarette platforms and access to Reynolds’ heat-not-burn technology.

However, Bonnie Herzog, managing director, beverage, tobacco and convenience store research at Wells Fargo Securities, while acknowledging the rumors linking BAT and RAI, said she believed a deal between RAI and Lorillard was more likely.

In any case, she said, even if a BAT/RAI deal did emerge, ultimately it was likely that Lorillard would be acquired by a combined BAT/RAI.

Australia cuts funding for quit-smoking initiatives among its indigenous people

| July 9, 2014

Cuts to Australia’s Tackling Indigenous Smoking program in this year’s budget will contribute to the early deaths of Aboriginal smokers, according to a story by Sarah Dingle for the Australian Broadcasting Corporation quoting warnings by a former race discrimination commissioner.

The program’s budget is $65 million a year, but Tom Calma said a decision had been made to cut funding by $130 million over five years—effectively more than a third of the program’s annual funding.

In the 1940s more than 70 percent of non-Indigenous Australian men were smokers, a figure that has been cut to 20 percent.

But Calma said indigenous Australia had been left behind. “In the indigenous population, it’s around about 42 percent of our people smoke, so it’s over double the smoking incidence of the general population,” he said.

“But in some of our remoter communities, we know that it’s as high as 70 percent.”

Such high smoking rates are said to have significant implications for the life expectancy of indigenous Australians.

A spokesperson for Assistant Health Minister Fiona Nash said the government was committed to addressing tobacco-related illness in indigenous people.

The spokesperson said a review of the current program would ensure that funding was directed toward services that delivered results.

Ignore the violence, just ban the smoking

| July 9, 2014

Tobacco control campaigners in China on Monday protested against smoking scenes in the movie Transformers, according to a Xinhua Newswire story, which said that the film had broken the country’s box office record.

In a letter to the State Administration of Press, Publication, Radio, Film and Television, the campaigners complain that Hound, a major character in Transformers: Age of Extinction, is seen with a cigar in his mouth, something that has had a bad influence on audiences, especially teenagers.

Nongovernment organizations, including Think Tank, Nature University and the Chinese Association on Tobacco Control (CATC), were among those who raised the issue.

The campaigners asked the administration to “examine and limit” the number of smoking shots in the movie, and to require all cinemas to run anti-smoking advertisements before it starts.

In 2011, the administration released a circular on smoking in movies and television plays. Since then, the CATC has made Dirty Ashtray awards to the movies and television plays featuring the most smoking.

NRT to go on general sale in Ireland

| July 9, 2014

A nicotine replacement product is to be allowed to go on general sale in Ireland for the first time following a decision to relax the rule that has confined the availability of such products to pharmacies, according to a story by Paul Cullen for The Irish Times.

The initiative by the Health Products Regulatory Authority (formerly the Irish Medicines Board) is likely to drive down the cost of anti-smoking aids as they become available in supermarkets and other retailers.

The decision by the authority to switch Nicorette from “pharmacy only” status to “general sale” status followed an application from the manufacturer.

“This will be the first NRT [nicotine replacement therapy] product range available for general sale in Ireland, and will result in these products being more widely accessible by people wishing to seek assistance to reduce or quit smoking,” the authority said.

It is expected that such products will become available at retailers from late August.

The decision does not affect the sale of e-cigarettes.

The authority said that where e-cigarettes were promoted as an aid to giving up smoking, they were considered to be a medicine requiring marketing authorization. Where no medicinal claim was made, they fell outside the remit of the authority.

Smokers getting younger in Egypt

| July 9, 2014

Egypt’s Minister of Social Solidarity said yesterday that the age at which people started to smoke had dropped to 10, according to Ahram Online quoting Al-Ahram’s Arabic news website.

It wasn’t clear from the report whether 10 represented an average age or the minimum age at which people were taking up the habit.

Nor was it mentioned what the average/minimum age had fallen from.

Ghada Wali said during an Anti-Addiction Conference that the incidence of cigarette smoking in Egypt had risen by five percentage points since 2009 to 24 percent in 2013.

The minister was quoted as saying that more than 60 percent of smokers were young adults “who have just begun their careers.”

She said the average personal spending on smoking in Egypt amounted to nearly EGP200 ($28) per month.

Pre-budget cigarette shortages the norm

| July 9, 2014

Cigarettes are in short supply in Nepal as traders hoard tobacco products in expectation that their prices will go up after the budget, according to a story in Republica.

The budget is scheduled to be brought down in the middle of this month.

Retailers say that since the government generally raises taxes on tobacco products through the budget speech, wholesalers are hoarding cigarettes so as to make a quick profit.

Wholesalers, however, rebut the allegations. They say it is the manufacturers and distributors who have reduced supply and that there is nothing wholesalers can do about it.

And manufacturer Surya Nepal is blaming the wholesalers and retailers for the shortage. Some big wholesalers and retailers were receiving increased supplies of cigarettes but were hoarding them, it said.

“Shortage of tobacco products before budget speech has become a usual phenomenon for the past few years as traders know prices of tobacco products will increase after the budget speech,” said Ravi KC, vice president of Surya Nepal.

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