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Reynolds American

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Reynolds American, Inc.
Company typeSubsidiary
IndustryTobacco
PredecessorBATUS, Inc.
Brown & Williamson
R.J. Reynolds[1]
Founded2004; 20 years ago (2004)
HeadquartersWinston-Salem, North Carolina, United States
Key people
David Waterfield (President and CEO)
ProductsCigarettes
RevenueDecrease US$ 8.236 billion (2013)[2]
Decrease US$ 8.304 billion (2012)[2]
Increase US$ 3.132 billion (2013)[2]
Decrease US$ 2.214 billion (2012)[2]
Increase US$ 1.718 billion (2013)[2]
Decrease US$ 1.272 billion (2012)[2]
Total assetsDecrease US$ 15.402 billion (2013)[3]
Increase US$ 16.557 billion (2012)[2]
Total equityDecrease US$ 5.167 billion (2013)[3]
Decrease US$ 5.257 billion (2012) [3]
Number of employees
5,400 (2011)
ParentBritish American Tobacco
Websitereynoldsamerican.com
Footnotes / references
[4]

Reynolds American, Inc. is an American tobacco company which is a subsidiary of British American Tobacco[5] and is the second-largest tobacco company in the United States.[6] Its holdings include R. J. Reynolds Tobacco Company, American Snuff Company (formerly Conwood Company), Santa Fe Natural Tobacco Company, and Niconovum AB.

Reynolds American's subsidiaries manufacture and market a variety of tobacco products, including cigarettes (Newport, Camel, Pall Mall, Kent, Doral, Misty, Capri, and Natural American Spirit brands), electronic cigarettes (Vuse brand), and moist snuff (Grizzly and Kodiak brands).[7]

In 2010, Reynolds American's operating companies sold about 28% of all cigarettes sold in the U.S.[8] In July 2014, Reynolds American announced the purchase of Lorillard Tobacco Company in a deal valued at $27 billion. In January 2017, Reynolds American agreed to be purchased by British American Tobacco for $49.4 billion.[9]

History

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Reynolds American was formed in January 2004[10] and began trading publicly on the New York Stock Exchange as RAI in August 2004.[7]

In July 2004, the U.S. business of British American Tobacco (Batus Inc. and Brown & Williamson) combined with that of R. J. Reynolds Tobacco Company (R. J. Reynolds), under the "R. J. Reynolds" name. RJR and Brown & Williamson were the second and third-ranking U.S. tobacco companies prior to the combination. After combination, R. J. Reynolds became a subsidiary of Reynolds American, with BAT holding a 42% share of RAI.[10] Santa Fe Natural Tobacco Company, which manufactures the additive-free Natural American Spirit brand of tobacco products, also became a subsidiary of Reynolds American at that time.[10]

Prior to becoming RAI operating companies, both R. J. Reynolds and Santa Fe were part of R. J. Reynolds Tobacco Holdings, Inc., which traded on the New York Stock Exchange as RJR. RJR became a subsidiary of RAI in July 2004.[10] R. J. Reynolds was established as a tobacco company in Winston-Salem, North Carolina in 1875.[11]

In 2006, Reynolds American expanded into the smokeless tobacco category, with the acquisition of Conwood, the second-biggest smokeless tobacco company in the United States. Conwood manufactures and markets moist and dry snuff, loose leaf, plug, and twist chewing tobaccos. At the time of the acquisition, 70% of Conwood's sales came from the growing moist-snuff segment, with the Grizzly brand showing the fastest growth.[12] Grizzly's continued growth since 2006 has made it the best-selling brand in the moist-snuff category.[13]

In 2008, RAI was recognized as a leader in corporate sustainability by being added to the membership in the 2008-2009 Dow Jones Sustainability North America Index (DJSI North American). RAI is the only U.S. tobacco company and one of 125 North American companies on the index.[14] Selection for the Index is based on performance in a number of economic, environmental and social criteria.[15]

The Wall Street Journal reported in November 2009 that Reynolds American intended to buy Sweden-based Niconovum AB, a maker of products such as nicotine gum, for $44.5 million.[16] The deal was completed in December.[17]

Former Chairman, President and CEO of Reynolds Tobacco Daniel "Daan" Delen assumed the positions of President and CEO of Reynolds American on March 1, 2011,[18] after former president, CEO, and chairwoman Susan Ivey announced she would retire as chairwoman November 1, 2010 and as President and CEO effective February 28, 2011.[19]

Ivey, now known as Susan Cameron, returned as CEO in April 2014 after being elected by the board of directors.[20]

In July 2014, Reynolds American, Inc. announced it would buy Lorillard Tobacco Company for roughly $25 billion a result of slowed sales. The deal is valued at $27.4 billion, including debt.[21][22] Reynolds agreed to pay $68.88 in cash and stock for every Lorillard share and assume its debt.[23] The deal also included the sale of the Kool, Winston, Salem, and blu brands to Imperial for $7.1 billion.[24] The merger became official on June 12, 2015.[25]

On September 15, 2016, the former speaker of the US House, John Boehner, joined the board of Reynolds American.[26]

On October 21, 2016, British American Tobacco announced that it had offered to buy the remaining 57.8 percent of Reynolds American for $47 billion.[27] In January 2017, Reynolds American agreed to a $49.4 billion deal, expected to close in the third quarter of the year after approval from both companies' boards of directors.[9] The deal was completed July 25, 2017.[5]

On February 25, 2020, Chief Judge Rodney Gilstrap of the United States District for the Eastern District of Texas determined that Reynolds remained liable for its full portion of an annual $8 billion dollar settlement payment based on a settlement agreement that Reynolds reached with the State of Texas in 1998.[28] Reynolds had previously claimed that its divestiture of several brands to Imperial had extinguished its obligation to make payments for those brands under the 1998 Settlement Agreement. Chief Judge Gilstrap disagreed in a 92-page memorandum opinion and order, finding that Reynolds' position was "oppressive, inequitable, and unreasonable" in addition to being contrary to governing law.[29]

References

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  1. ^ Reynolds American Inc., SECURITIES AND EXCHANGE COMMISSION report, Juny 30, 2004
  2. ^ a b c d e f g "REYNOLDS AMERICAN INC 2013 Annual Report Form (10-K)" (XBRL). United States Securities and Exchange Commission. February 11, 2014.
  3. ^ a b c "REYNOLDS AMERICAN INC 2014 Q1 Quarterly Report Form (10-Q)" (XBRL). United States Securities and Exchange Commission. April 23, 2014.
  4. ^ Reynolds American 10-K Archived 2012-12-02 at the Wayback Machine SEC Filing report. Retrieved November 15, 2012.
  5. ^ a b Craver, Richard (25 July 2017). "Reynolds American now entirely owned by British American Tobacco". Winston-Salem Journal. Retrieved 25 July 2017.
  6. ^ "Fortune 500". Fortune. CNNMoney.com. 4 May 2009. Retrieved 6 July 2009.
  7. ^ a b "Reynolds American, Inc" (PDF). Archived from the original (PDF) on 3 March 2016. Retrieved 10 May 2011.
  8. ^ "Reynolds American's profits climb". Greensboro News Record. 21 April 2010. Archived from the original on 4 September 2012. Retrieved 10 May 2011.
  9. ^ a b "British American Tobacco Agrees to Pay $49 Billion to Take Full Control of Reynolds American". The Wall Street Journal. January 17, 2017. Retrieved January 17, 2017.
  10. ^ a b c d "Reynolds American Inc". FORM 8-K. Securities and Exchange Commission. 30 July 2004. Retrieved 6 July 2009.
  11. ^ "R.J. Reynolds Tobacco Co. Inc". BusinessWeek. The McGraw-Hill Companies. Archived from the original on January 5, 2009. Retrieved 6 July 2009.
  12. ^ "Reynolds American Moves into Smokeless Tobacco". Convenience Store News. Nielsen Business Media, Inc. 26 April 2006. Retrieved 6 July 2009.[permanent dead link]
  13. ^ "Fitch Affirms Reynolds American's IDR at 'BBB-'; Outlook Stable" (Press release). BusinessWire. 2009-06-24. Archived from the original on 2012-09-02. Retrieved 2009-07-06.
  14. ^ "Sustainability Leaders" (PDF). Dow Jones Sustainability Indexes. SAM Indexes GmbH. 3 March 2009. Archived from the original (PDF) on 16 July 2011. Retrieved 6 July 2009.
  15. ^ "Corporate Sustainability Assessment Criteria". Dow Jones Sustainability Indexes. SAM Indexes GmbH. Archived from the original on 2 June 2009. Retrieved 6 July 2009.
  16. ^ "Report: Reynolds in Talks to Acquire Swedish Company". Winston-Salem Journal. 2009-11-10. Archived from the original on 2012-08-20. Retrieved 2009-11-10.
  17. ^ "Reynolds American closes deal with Swedish company". Winston-Salem Journal. 2009-12-10. Archived from the original on 2012-08-20. Retrieved 2009-12-10.
  18. ^ "Reynolds American Inc. - Reynolds American Inc. Leadership Team". Archived from the original on 2011-04-19. Retrieved 2011-05-12.
  19. ^ Craver, Richard (2010-10-15). "Susan Ivey, top executive at Reynolds American, to retire in February". Winston-Salem Journal. Archived from the original on 2013-01-27. Retrieved 2010-10-15.
  20. ^ Arcieri, Katie. "Former Reynolds CEO returns to lead company; current CEO Delen to retire". Retrieved 15 July 2014.
  21. ^ Cavale, Siddharth (15 July 2014). "Reynolds American to buy Lorillard for about $25 billion". Reuters. Retrieved 15 July 2014.
  22. ^ Calia, Michael (15 July 2014). "Reynolds American to Buy Lorillard for $25 Billion". Wall Street Journal. Retrieved 15 July 2014.
  23. ^ De la Merced, Michael; Bray, Chad (15 July 2014). "Reynolds American to Buy Lorillard for $27.4 Billion". New York Times. Retrieved 15 July 2014.
  24. ^ Mangan, Dan (July 15, 2014). "Feeling blu? E-cig company spun off in major tobacco deal". CNBC.
  25. ^ "It's official: $27.4B Reynolds-Lorillard merger complete". Triad Business Journal. 12 June 2015. Retrieved 30 July 2015.
  26. ^ "Camel Smoker John Boehner Joins Board of Reynolds American". 15 September 2016. Retrieved 29 September 2016.
  27. ^ Craver, Richard (21 October 2016). "British American Tobacco moves to buy all of Reynolds American in $47B deal". Winston-Salem Journal. Retrieved 21 October 2016.
  28. ^ "RJR Owes for Former Brands Under Landmark 1998 Tobacco Deal". news.bloomberglaw.com.
  29. ^ "RJ Reynolds Must Keep Paying Texas For '98 Settlement - Law360". www.law360.com.
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