Last Friday, on August 2, tobacco company Reynolds American Inc. celebrated its 10th anniversary of company’s creation.
Reynolds American finished its $4.4 billion purchase of Brown & Williamson Tobacco Corp. on July 30, 2004. This has arised discussions about the benefits of this purchase for the future of company. In order to finish the deal successfully, the directors of Reynolds agreed to sell a 42% ownership stake to British American Tobacco Ltd., as Brown & Williamson was its U.S. subsidiary. British American Tobacco got 5 representatives on the Reynolds board.
There existed an agreement between tobacco companies which imposed a 10-year moratorium on BAT purchasing more Reynolds stock, which would demand Reynolds board approval. Last week there was ended action of the moratorium.
There were presented a lot of analyst forecasts and media reports regarding BAT buying the majority ownership of Reynolds as well as Reynolds buying Lorillard Inc.
Reynolds’ president Susan Cameron told that they are proud of the great progresses they made because this will improve company’s position on the tonacco market. Susan Cameron occupied the position of the company’s top executive for almost 7 years. Over the 10 years the company was always looking for the new ways to satisfy their clients which made them so popular worldwide. Reynolds Company got a total shareholder return of 542%, outpacing the S&P 500’s 112% return.
Cameron told that due to key cigarettes brands such as Camel and Pall Mall the tobacco company wants to achive leadership on the market.
The joint agreement between Reynolds and BAT will lead to development of tobacco products of latest generation.