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Timing of SC share acquisition proposal ‘compelling’

| February 24, 2015

British American Tobacco is evaluating a possible public tender offer to acquire up to all of the 24.7 percent of Souza Cruz shares that are not owned by BAT, and to delist the company.

In a press note posted on its website yesterday, BAT said any offer for Souza Cruz’s shares would be at a price per share of R$26.75, to be paid in cash, in Brazilian reals, and to be reduced by any dividend paid by Souza Cruz.

‘A price of R$26.75 per share would represent a premium of 30.0 percent to Souza Cruz’s volume weighted average closing share price over the three months to Friday 20 February 2015 (being the last trading day before the date of announcement)’, the press note said.

‘The consummation of the offer is still subject to, inter alia, BAT’s board approval and the finalization of an appraisal report by an independent evaluator which is required in accordance with the relevant Brazilian rules.

‘There can be no certainty that any offer will be made, the related terms of any such offer nor that any delisting will occur.’

Erik Bloomquist, a senior analyst, consumer staples, at Berenberg, said the timing of BAT’s proposal was compelling for four reasons:

1) ‘the real is near a 10-year low relative to sterling;

2) ‘interest rates are near five-year lows with attractive rates available for highly rated corporates;

3) ‘tax headwinds in the SC business could dissipate substantially in 2016; and

4) ‘in our opinion, SC is one of the jewel businesses in BAT.’

Learning to appreciate nicotine

| February 23, 2015

A nicotine metabolite once thought to be inactive, cotinine, in fact supports learning and memory by amplifying the action of a primary chemical messenger involved in both, according to a piece in quoting a new study.

The new findings apparently indicate cotinine makes brain receptors more sensitive to lower levels of the messenger acetylcholine, which are typical in Alzheimer’s, and may boost effectiveness, at least for a time, of existing therapies for Alzheimer’s and possibly other memory and psychiatric disorders.

“This is the first hint of what the mechanism of the metabolite cotinine might be,” said Dr. Alvin V. Terry, chairman of the Department of Pharmacology and Toxicology at the Medical College of Georgia at Georgia Regents University and corresponding author of the study in the Journal of Pharmacology and Experimental Therapeutics.

The full story is at:

Question raised over windfall-tax effectiveness

| February 23, 2015

A ‘windfall tax’ on tobacco companies would lead to the loss of millions of pounds for the UK taxman, according to a report in The Times quoting research by the consultancy, Oxford Economics.

Volumes of UK duty-paid cigarettes and hand-rolled tobacco could decline, leading to a net loss of £167 million if the levy were set at £1 billion, and £28 million if it were introduced at £100 million, Oxford Economics was quoted as saying.

These suggestions came ahead of last week’s deadline for submissions to the government’s public consultation on the introduction of a levy on tobacco manufacturers and importers.

Ministers, who unveiled the proposal in the autumn statement, were said to believe that because smoking imposed costs on society; it was fair to ask the tobacco industry to make a greater contribution.

The Chancellor George Osborne’s announcement followed a declaration by the leader of the opposition Labour Party, Ed Miliband, that, should it come to power following the general election in May, his government would introduce a levy, based on companies’ market share, to raise at least £150 million a year.

Second tobacco firm issues plain-packs threat

| February 23, 2015

John Player has threatened the Irish government with legal action over plans to introduce standardized tobacco packaging, according to a story in the Independent.

The paper said the company had warned the Minister for Health, Dr. Leo Varadkar, and the Minister for Children and Youth Affairs, Dr. James Reilly, that they would be hauled before the courts if the proposals were passed into law.

A letter from solicitors McCann Fitzgerald said the legislation would ‘unlawfully impair’ its client’s intellectual property rights.

But Reilly, referring to the letter and a separate threat by another tobacco company, JTI Ireland, said the government would not be ‘intimidated’.

Meanwhile, according to a story in The Irish Examiner, 10 leading health campaign groups representing doctors and people suffering from cancer, heart disease and other life-threatening conditions have written to ministers urging them not to scrap the standardized packaging plans.

The letter, seen by the Examiner, insists Reilly is right to be pushing through the policy, insisting the measure is ‘absolutely justified and necessary’.

The two-page letter was said to have been sent in response to claims from business groups that the initiative would cost jobs and stall the economy.

It is signed by senior officials from the Irish Cancer Society, Irish Heart Foundation, Ash Ireland, the Children’s Rights Alliance, Barnardos, the Asthma Society of Ireland, the ISPCC, COPD Support Ireland, the Irish Thoracic Society and the Irish College of Ophthalmologists.

Graphic warnings – 12th time unlucky for smokers?

| February 23, 2015

South Korea’s lawmakers are due to start debating tomorrow whether to compel cigarette manufacturers to include graphic health warnings on cigarette packs, which currently carry printed warnings only, according to a story in The Korea Times.

The National Assembly Health and Welfare Committee is scheduled to review the government’s proposal and some observers believe there is a good chance that it will become law.

This is despite the fact that the government has made 11 unsuccessful attempts since 2002 to have graphic warnings included on cigarette packs.

One member of the committee and of the main opposition party, New Politics Alliance for Democracy was quoted as saying that many committee members agreed that it was time for mandatory graphic warnings, but they had to figure out the how and when.

But opposition from smokers is expected to be strong as they argue that smoking is a basic right granted by the Constitution.

And possible lobbying from tobacco companies will create an obstacle.

Three new tobacco varieties for Malawi’s growers

| February 23, 2015

Malawi’s Agricultural Research and Extension Trust (ARET) has introduced three new tobacco varieties that are said to be pest and disease resistant, and fast maturing.

The release of the three new varieties, ARET Barley Hybrid (ABH) 12, ABH 31 and ABH 43, was announced by ARET’s deputy director responsible for extension and specialist services, John Nyangulu, during an agricultural field day on Friday at Nselema in Machinga.

Nyangulu said the three varieties were ideal for Machinga because they could withstand diseases such as Nematodes and Fusarium Wilt, commonly known as Mandolo and Chikhosi respectively.

ARET cautioned growers against recycling seeds of the three newly introduced varieties, saying that doing so would negatively affect quality and production.

ARET, which was established in 1995 to develop and disseminate tobacco technologies through research, has research stations at Mwimba in Kasungu, Kandiya in Lilongwe and Kabwafu in Mzimba.

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