R.J. Reynolds, British American to Merge
Posted on: Monday, 27 October 2003, 06:00 CST
A month after trimming 40 percent of its work force, R.J. Reynolds Tobacco on Monday agreed to merge with British American Tobacco PLC, the parent company of rival Brown & Williamson Tobacco Corp.
Under the deal, a new publicly traded holding company will be formed called Reynolds American Inc., the companies said in a joint statement.
By combining the second and third largest U.S. tobacco companies, Reynolds American Inc. will have annual sales of about $10 billion and annual domestic cigarette volume of 136 billion units - or about 30 percent of the cigarette sales in the United States.
Under terms of the agreement, BAT will own 42 percent of Reynolds American Inc. through its Brown & Williamson subsidiary. Existing RJR shareholders will control 58 percent of the company through a one-for-one exchange for stock of the new company, the companies said.
The new company plans to consolidate headquarters and operations in Winston-Salem, N.C., RJR's current home. The full integration of the companies is expected to result in more than $500 million in annual savings.
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