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RAI to complete Lorillard acquisition on Friday

| June 9, 2015

Reynolds American (RAI) is expected to complete its acquisition of Lorillard on Friday. At the same time, Imperial Tobacco’s ITG Brands will acquire from RAI and Lorillard operating companies the KOOL, Salem, Winston and Maverick cigarette brands, and the blu eCigs electronic cigarette brand, along with other assets.

In a note posted on both the RAI and Lorillard websites, the two companies announced yesterday the completion of the acquisition’s ‘final significant condition’.

‘The federal district court overseeing a remedial order in relation to a lawsuit brought by the U.S. Department of Justice against subsidiaries of RAI and Lorillard, along with other companies, has approved the sale of certain cigarette brands and businesses to Imperial Tobacco’s ITG Brands, LLC subsidiary,’ the note said.

The approval came when Federal Judge Gladys Kessler ruled that the public corrective statements that RAI and Lorillard are required to make under the terms of her ruling in 2006 in relation to a 1999 Racketeer Influenced and Corrupt Organizations case would continue to apply as originally intended and that the public interest would not be harmed by granting the unopposed motion.

RAI and Lorillard said they expected to complete the acquisition and the related transactions on June 12, ‘subject to the satisfaction of remaining closing conditions’.

“We are very pleased to be able to proceed with this transformative acquisition,” said Susan M. Cameron, RAI’s president and CEO. “With the addition of Lorillard’s strong Newport brand, RAI’s operating companies will have brand portfolios that reflect diversification and strength across product categories and across geographies.”

Cameron said that she expects the transaction to provide RAI with additional resources to invest in innovation, R&D and its operating companies’ brands. “Investing in innovation will benefit adult tobacco consumers and wholesale and retail customers alike,” she said.

It is projected that, following the transactions, RAI will earn more than $11 billion in annual revenues and about $5 billion in annual operating income. And its operating companies will have ‘key brands’ across major industry categories: Newport, Camel, Pall Mall and Natural American Spirit in combustible cigarettes; Grizzly in smokeless tobacco; and VUSE in the vapor market.

“This is an important milestone in our ability to deliver value to our shareholders, and benefits to our customers, consumers and employees,” said Murray Kessler, Lorillard’s chairman, president and CEO. “We look forward to continuing to work with Reynolds American and Imperial Tobacco to successfully complete these transactions.”

Kessler will join RAI’s board of directors following the closure of the transactions.

‘As previously disclosed on July 15, 2014, RAI and Lorillard announced an agreement in which RAI agreed to acquire Lorillard in a cash-and-stock transaction,’ the note said. ‘At closing, Lorillard shareholders will receive $50.50 in cash and 0.2909 of a share of RAI stock for each share of Lorillard stock they own.

‘Also on July 15, 2014, RAI and Lorillard announced agreements for their operating companies to sell the KOOL, Salem, Winston, Maverick and blu eCigs brands and other assets and liabilities to a subsidiary of Imperial Tobacco Group, PLC for a total consideration of approximately $7.1 billion in cash.

‘As part of the transactions, British American Tobacco p.l.c. (BAT) will maintain its approximately 42 percent ownership in RAI through an investment of approximately $4.7 billion (based on RAI’s closing share price of $60.16 as of July 2, 2014, the same share price used to determine the stock component of Lorillard shareholders’ consideration).’

Meanwhile, in a note posted on its website yesterday, Imperial said that the US District Court for the District of Columbia had approved the sale of US cigarette brands to ITG Brands in accordance with the DOJ case involving those brands, though it did not name the brands.

NY state smoking rate down to 14.5 percent

| June 9, 2015

New York Governor Andrew Cuomo said yesterday that the state’s smoking rate fell last year to a historic low of 7.3 percent among high school students and 14.5 percent among adults, according to a story by Joseph Sector for the Democrat and Chronicle, relayed by the TMA.

In 2011, smoking among high school students stood at 12.5 percent and smoking among adults stood at 18.1 percent.

The US national average smoking rate is 17.8 percent for adults.

New York State has the highest cigarette excise tax, $4.35 per pack, while New York City applies an additional tax of $1.50 per pack.

A February 2015 report by the Tax Foundation found that 58 percent of the state’s cigarette market was accounted for by illegal sales.

Cuomo said that the state health department had received about $10 million in federal funding to expand its program to reduce tobacco use.

London cigar auction set for June 15

| June 9, 2015

C.Gars Auctions is due to hold its summer auction sale at The Bulgari Hotel in Knightsbridge, London, from 14.00 on June15.

A press note from C.Gars said that the June auction would be the 15th such event since its auction department was established in 2009

‘Auctioneer Jonathan Humbert will once again be conducting this important sale of over 300 Lots of vintage, mature, pre-embargo, Davidoff, Dunhill and limited edition Havana cigars on behalf of estates, investors and collectors,’ the note said.

For the first time bidders who are unable to attend will be able to bid online.

The C.Gars 2015 online auction catalogue is at:

Exploring visions of security through paperboard

| June 9, 2015

In an industrial workshop in Strömsbruk, northern Sweden, multimedia artist Nils Olof Hedenskog is creating an installation that it is hoped will attract interest from art institutions around the world. The raw material he is working with is paperboard – specifically Invercote from Iggesund Paperboard.

“For me there exists a tension between the limitlessness of art and the fact that I am in a strict, production-oriented environment where everything is based on rationality,” he says during a break from his work. “I have six months to create something that represents this tension.”

Iggesund Paperboard, which offered him the opportunity to be an artist in residence, has a long tradition of working with artists. When the company celebrated its 300th anniversary at the end of the last century, it asked the Swedish painter Mårten Andersson to depict various aspects of its production process. For the past 15 years Inger Drougge-Carlberg, a textile artist who has increasingly been working with paper pulp, has had a studio on site at the mill. And five years ago Iggesund challenged packaging designers with its Black Box Project, in which seven international designers had to fill a box of specific dimensions with contents that challenged the performance abilities of the company’s most successful product, Invercote.

“We manufacture the basic material paperboard so we are a very long way back in the processing chain,” said Staffan Sjöberg, who works at Iggesund’s Market Communications department. “Our own success is very dependent on all the creative people around the world who make fantastic things from Invercote. So of course we want to foster creativity both on the artistic level but also in the form of the innovations that our customers in the packaging segment put their heart and soul into.”

Sjöberg readily admits that the end goal of Iggesund’s creative joint projects is to sell more paperboard. But he says that to attract attention in the creative world a company must step outside the traditional commercial pathways, dare to hand over control and see where external creative forces can take it.

“It’s a balancing act,” he said. “In traditional business communications the aim is to control everything. In projects like this one you have to dare to give up control so that your efforts to communicate will hopefully reach further than those based on traditional methods.”

In the industrial workshop Nils Olof Hedenskog is working on models of an installation that will be built of paperboard with a special structure. The aim is to present the installation at an exhibition in the summer of 2015.

“I’ve worked with paper-based materials for several periods during my artistic career,” he says. “Now it feels terrific to be able to work with material from Iggesund, which has such strong environmental documentation.”

Hedenskog’s installation has the working name of ‘Asylum’ and consists of six paperboard towers enclosing a space. Viewers can look into the space but not enter it. On the outside the towers are not coloured; their structure together with the lighting will create various nuances of grey. On the inside they are painted in fluorescent colours, which will create light that will radiate out between the towers and through peepholes.

“I’m creating a reflection of the current situation in Europe – with hundreds of thousands of refugees who want to get inside but who most often only get a glimpse of what is inside Europe’s walls,” Hedenskog said.

Artist Inger Drougge-Carlberg has had a studio on site at the Iggesund mill for almost 15 years.

Artist Inger Drougge-Carlberg has had a studio on site at the Iggesund mill for almost 15 years.

Eastern looks to build Malawi plant within 18 months

| June 8, 2015

A project under which Egypt’s Eastern Tobacco Company is partnering with Malawi’s Auction Holdings Limited (AHL) to set up in Malawi a $20 million cigarette manufacturing plant is due to be completed within 18 months, according to a StarAfrica story.

Late last month it was announced that the Malawi government and Eastern had signed a memorandum of understanding in respect of the cigarette manufacturing plant, which is to be located in Lilongwe.

Eastern’s chairperson, Nabil Abdelaziz, was quoted as saying that his company was impressed with Malawi’s Burley tobacco, which was mostly of good quality for making cigarettes.

He said that Egypt would provide a ready market for cigarettes from the new factory.

Meanwhile, AHL’s CEO, Evans Matabwa, said the development was an important milestone for both the local and global tobacco industries.

“The cigarette manufacturing plant will provide significant gains to Malawian farmers and the economy,” he said.

EU’s TPD implementation unaffected by court cases

| June 8, 2015

The EU Commission has said it does not believe that current court cases brought against the new Tobacco Products Directive (TPD) pose obstacles to the directive’s implementation.

The Commission was responding to a question by the Croatian MEP Dubravka Šuica.

In part of the preamble to her question, Šuica said that some tobacco companies had brought a lawsuit in connection with the tobacco directive, arguing that it violated provisions of European treaties, including the Treaty of Lisbon, such as those on restricting the flow of goods and services.

“Dоеs thе Commission consider these court proceedings to be an obstacle to the implementation of the tobacco directive, which should take effect in 2016?,” she asked. “Are there any other obstacles that could potentially endanger the implementation of the Tobacco Directive by the middle of 2016?”

In its reply, the Commission said that ongoing court proceedings brought against EU directives did not have a suspensive effect on implementation efforts. ‘As such, the Commission does not consider any court proceedings currently being brought against the new Tobacco Products Directive … to pose obstacles to its implementation, and member states are still bound by the transposition deadline of 20 May 2016, when the majority of its provisions will begin to be applied,’ it said.

‘The Commission does not consider that there are other obstacles that could potentially endanger the directive’s implementation. One of the central objectives of the Commission is to ensure a timely adoption of the implementing legislation necessary to make the provisions of the new TPD fully operational. To this end, it has published a detailed implementation plan which it updates regularly. It is also working in close collaboration with member states and relevant stakeholders and good progress is being made.’

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