Imperial Tobacco shareholders yesterday approved the acquisition by the company’s wholly-owned subsidiary, ITG Brands, of a portfolio of US cigarette brands, the electronic cigarette brand blu, and the national sales force, offices and production facilities currently owned by Lorillard. These assets are currently owned by Reynolds American Inc and Lorillard.
Yesterday, too, Reynolds and Lorillard shareholders voted in favor of the acquisition of Lorillard by Reynolds.
The deals are still subject to regulatory approval and other conditions, but they are expected to be completed during the first half of this year.
Reynolds American (RAI) shareholders today approved two proposals related to the company’s anticipated acquisition of Lorillard—the issuance of RAI common stock to shareholders of Lorillard and the issuance of RAI common stock to British American Tobacco.
Approval of both proposals is a condition to the obligations of Reynolds American and Lorillard to complete the deal. The completion of the merger remains subject to regulatory approvals and satisfaction or waiver of other conditions.
The transaction is expected to close in the first half of 2015.
India looks set to bring in additional stringent anti-tobacco measures, including a ban on the sale of single cigarettes, which, Bloomberg reported earlier this week, make up about 70 percent of the country’s cigarette sales.
The measures would involve, also, increasing the minimum age for buying tobacco products from 18 to 21, and eventually to 25.
According to a story in the latest issue of the BBM Bommidala Group newsletter, the Indian Ministry of Health and Family Welfare has said that it is in agreement with the recommendations of the Parliamentary Standing Committee on Health and that it is pressing ahead with the Cigarettes and Other Tobacco Products (Amendment) Bill 2015.
The committee’s recommendations include, as well as the ban on sales of single cigarettes and the increases in the minimum age, curbing the sale of certain tobacco products, doing away with designated smoking areas in, for instance, hotels and restaurants, and increasing five-fold the fines imposed on those caught using tobacco products in public places.
Other amendments would prevent people under the age of 18 from being engaged in the cultivation of leaf tobacco or in the manufacture or sale of tobacco products, and would crack down on any form of surrogate advertising of tobacco products, including those on social media.
The recommendations call, too, for the setting up of an ‘autonomous’ national tobacco control organization to implement and monitor the bill’s provisions, and for the use of special session courts to deal with contraventions.
The ministry has placed the bill in the public domain and is seeking suggestions from interested parties.
The massive tobacco-product tax increase imposed in South Korea on January 1 has had considerable repercussions, at least one of which was probably not foreseen, according to a story in The Korea Herald.
Anecdotal evidence suggests that there might have been a reduction in the number of company dinners being held as team-building exercises. This is because the consumption of alcohol, an important feature of such ‘hoesik’, makes it more difficult for those who quit smoking in response to the tax and price increase to maintain their resolve.
During the first fortnight of 2015, the price of many local cigarettes jumped from WON2,500 ($2.30) to WON4,500 ($4.15) a pack.
The huge increase has been particularly disruptive because it was brought in against a backdrop in which there had been no price increases for about 10 years.
The Herald story said the ugly side effects of the tobacco tax policy had included the personal use of corporate credit cards for buying cigarettes, illegal cigarette sales online, and increasing visits by non-smoking travelers to the cigarette sections of duty-free shops.
The last two effects mentioned here cannot have come as a surprise. Current duty-free prices for popular brands of cigarettes range from $18 to $19 a carton, while the same cigarettes bought in a normal outlet in Korea retail for $41.
Some illegal online cigarette sales have involved people of previously good character who hoarded the products before the price rise and who possibly did not realize that only state-authorized retailers could sell tobacco products.
Philip Morris Ltd is aiming to roll out a retailer education program across the UK later this year as part of its campaign to fight the illegal tobacco trade, according to a Talking Retail story quoting the Independent Retail News.
PML carried out a trial program in the city of Manchester and is now evaluating the feedback from the retailers who took part in what is called the ‘Ex-It’ campaign.
“We are looking at a national launch this year,” corporate affairs director, UK and Ireland, James Barge, was quoted as saying. “We are highly encouraged by the early results.”
PML used its newly created sales force to educate unaffiliated retailers in the city about the impact the illegal tobacco trade can have on their businesses and local communities.
The campaign included POS (point-of-sale) posters with messages such as ‘I care about the community, that’s why I don’t sell illegal tobacco’.
Manchester was chosen after a survey showed that the amount of illicit tobacco products available in the city had doubled over a year.
Test purchasers in the city were able to buy illicit tobacco products on 32 separate occasions over a three-day period, through fast food outlets and shops, including carpet shops, and even from road sweepers.
Reynolds American Inc. is due to host a conference call and webcast from 09.00 Eastern Time on February 10 following the release of its fourth-quarter 2014 financial results.
The speakers will be Susan M. Cameron, president and CEO, Thomas R. Adams, CFO, and Morris L. Moore, vice president of investor relations.
The conference call and webcast will be available on a listen-only basis at www.reynoldsamerican.com, where registration is available and a replay is due to be made available.
The conference call numbers are (877) 390-5533 (toll-free) and (678) 894-3969 (international).