Reynolds-Lorillard deal to close Friday

The historic purchase by Reynolds American Inc. of Lorillard Inc. has a closing date — Friday — after a federal judge signed off Monday on the manufacturers selling five brands to Imperial Tobacco Group Plc.

Judge Gladys Kessler’s decision was the final legal hurdle to a megadeal announced in July 2014 and valued at $29.1 billion Monday. Reynolds is essentially buying Newport, the top-selling U.S. menthol brand.

Under the terms of the federal District Court’s remedial order in 2006, the court had to enter an order finding that ITG Brands, Imperial’s U.S. subsidiary, intends to and is capable of complying with the order before Reynolds can transfer the four cigarette brands.

The Federal Trade Commission voted 3-2 on May 26 to give the deal preliminary approval.

Reynolds spokesman David Howard said Monday that the FTC’s 30-day public comment period “does not preclude the companies from proceeding with closing.” Howard expressed confidence Reynolds will be “ready to hit the ground running” with integration starting Friday.

The deal’s final value will be set at the close of market trading Thursday. Reynolds is projected to have more than $11 billion in annual revenues.

“We are very pleased to be able to proceed with this transformative acquisition,” Susan Cameron, Reynolds’ president and chief executive, said in a statement.

“With the addition of Lorillard’s strong Newport brand, Reynolds’ operating companies will have brand portfolios that reflect diversification and strength across product categories and across geographies.”

R.J. Reynolds Tobacco Co. will have the No. 2-4 U.S. traditional cigarette brands in Newport, Camel and Pall Mall, respectively.

Cigarette Companies Fall in Line With Price Increases

Altria's Philip Morris USA on May 7 announced to the trade a decrease in off-invoice promotional allowances of six cents per pack on Marlboro and L&M cigarettes, reducing the effective off-invoice promotional allowance to two cents per pack on Marlboro and 15 cent per pack on L&M, said Nik Modi, tobacco analyst at RBC Capital Markets, Chicago, in a research note Wednesday night.

Richnond, Va.-based PM USA is also taking a list price increase of $1.10 per carton on Parliament and 60 cents on the remainder of its portfolio, added Modi. The changes are effective on shipments on or after May 11, 2014.

"This price increase came roughly one month earlier than the price increase last year (which was on June 5th, 2013)," he said. "We expect [Lorillard and Reynolds American] to follow with their respective price increases by week's end. We see [the] announcement as a positive for our bullish thesis on the tobacco pricing environment. As has been the case historically, we expect the Big Three tobacco players to continue their trend of taking price increases on cigarettes twice a year and maintaining healthy net price realization of 3% to 4%."

They didn't wait that long. Greensboro, N.C.-based Lorillard [on May 8] announced to the trade a 60-cents-per-carton (six-cents-per-pack) increase on its entire portfolio, including on Newport and Maverick, Modi wrote in a followup note. Lorillard's price is effective on orders on or after May 9, 2014.

Also on May 8, Winston-Salem, N.C.-based RJ Reynolds Tobacco announced price increases on its cigarette brands. In line with PM USA's promo reduction and Lorillard's price increase, RJ Reynolds is raising prices across its entire portfolio by 60 cents per carton (six cents per pack). Reynolds price increase is effective on orders on or after May 8, 2014.

New York City-based Wells Fargo Securities analyst Bonnie Herzog wrote, "Overall,the cigarette promo decreases/list price increases that [PM USA] and [Lorillard] have taken are positive and indicate continued pricing power, in our view. Given that consumption will likely continue to decline in the midsingle-digit range, pricing is necessary to drive top-line growth."

And following the Big Three, Morrisville, N.C.-based Liggett Vector Brands also took a list price increase on Liggett Select, Eve, Grand Prix and Pyramid of 60 cents per carton (six cent per pack), Modi wrote. Liggett's price is effective on orders on or after May 12, 2014. "We expect the next round of price increases to come late fall 2014," he concluded.

Meanwhile, on April 30, Altria's U.S. Smokeless Tobacco announced that it is taking list price increases on straight stock SKUs across its moist smokeless tobacco (MST), snus and dry snuff portfolio, Modi said.

Effective May 11, 2014, Copenhagen, Cope, Skoal, Husky, Red Seal will see list price increases per roll of 30 cents and six cents per can, and WB Cut will see list price increase of 36 cents per carton and six cents per pouch.

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Lorillard To Participate In The Goldman Sachs Global Staples Summit

The representatives of Lorillard Inc., the third largest tobacco company in the USA declared this week that Murray S. Kessler, Chairman, President and Chief Executive Officer, together with David H. Taylor, Chief Financial Officer, will take part in the Goldman Sachs Global Staples Summit that will be held in New York. The manufacturer of Kent

Lorillard to Release First Quarter 2014 Results on April 24, 2014

Lorillard, Inc. (NYSE: LO), the maker of cheap Kent cigarettes, announced that it will release first quarter 2014 results on Thursday, April 24, 2014.

A conference call for analysts and investors will begin at 1:00 p.m. Eastern Time on Thursday, April 24, 2014, which will be hosted by Murray S. Kessler, Chairman, President and Chief Executive Officer, and David H. Taylor, Executive Vice President, Finance and Planning and Chief Financial Officer. Investors can participate in the conference call by dialing (888) 239-6824 (domestic) or (706) 902-3787 (international). The passcode for this event is: 28927750.

The news release and a live webcast of the conference call will also be available under the Investor Relations section of Lorillard's website. The conference call will be available for replay in its entirety through May 1, 2014. If you wish to listen to the replay of this conference call, please visit Lorillard's website at www.lorillard.com or dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and enter passcode: 28927750.

About Lorillard, Inc.

Lorillard, Inc. (NYSE: LO), through its Lorillard Tobacco Company subsidiary, is the third largest manufacturer of cigarettes in the United States.  Founded in 1760, Lorillard is the oldest continuously operating tobacco company in the U.S.  Newport, Lorillard's flagship premium cigarette brand, is the top selling menthol and second largest selling cigarette in the U.S.  In addition to Newport, the Lorillard product line has four additional cigarette brand families marketed under the Kent, True, Maverick and Old Gold brand names.

These five brands include 43 different product offerings which vary in price, taste, flavor, length and packaging.  Lorillard, through its other subsidiaries, is also a leading global electronic cigarette company, marketed under the blu eCigs and SKYCIG brands.  Newport, Kent, True, Maverick, Old Gold, blu eCigs and SKYCIG are the registered trademarks of Lorillard and its subsidiaries.  Lorillard maintains its corporate headquarters and manufactures all of its traditional cigarette products in Greensboro, North Carolina.

Lorillard Received FDA Approval for New Products

This week Lorillard Inc. declared that is has received from FDA a notification about two of its tobacco products (non-menthol cigarettes) that were found “substantially equivalent” to tobacco products previously permitted to be sold on the USA market. The finding made by FDA allows Lorillard to start marketing of the new products, which do correspond

Lorillard, Inc. Announces $500 Million Share Repurchase Program

Lorillard, Inc., the third largest manufacturer of cigarettes in the United States, announced today that the Company's Board of Directors approved a new share repurchase program, authorizing the Company to repurchase in the aggregate up to $500 million of its outstanding common stock.

Purchases by the Company under the new program may be made from time to time at prevailing market prices in open market purchases, privately negotiated transactions, block purchase techniques or otherwise, as determined by the Company's management. The purchases will be funded from existing cash balances.

This program does not obligate the Company to acquire any particular amount of its common stock. The timing, frequency and amount of repurchase activity will depend on a variety of factors such as levels of cash generation from operations, cash requirements for investment in the Company's business, current stock price, market conditions and other factors. The share repurchase program may be suspended, modified or discontinued at any time and has no set expiration date.

 

About Lorillard, Inc.

Lorillard, Inc., through its Lorillard Tobacco Company subsidiary, is the third largest manufacturer of cigarettes in the United States.  Founded in 1760, Lorillard is the oldest continuously operating tobacco company in the U.S.  Newport, Lorillard's flagship premium cigarette brand, is the top selling menthol and second largest selling cigarette brand in the U.S.  In addition to Newport, the Lorillard product line has four additional cigarette brand families marketed under the Kent, True, Maverick and Old Gold brand names. These five brands include 43 different product offerings which vary in price, taste, flavor, length and packaging.  Lorillard, through its LOEC, Inc. subsidiary, is also the leading electronic cigarette company in the U.S, marketed under the blu ecigs brand.  Lorillard maintains its headquarters and manufactures all of its traditional cigarette products in Greensboro, North Carolina.