Lorillard to sell Blu to Imperial tobacco following Reynolds acquisition

[Oliver]

As the title says, Reynolds is to purchase Lorillard and sell its Blucigs interests to imperial.

So, what do we think? Is this an antitrust move, or is it a resolution of the patents issue, remembering that Imperial bought the patents portfolio from Hon Lik's company earlier this year?

http://www.cnbc.com/id/101834913

 

[rothenbj]

I would suppose it would depend on how Imperial's agreement was written with Hon Lik's company. Is Imperial able to fold additional, existing product's into this agreement? With the drop off of sales of Blu and Reynold's marketing of Vuse as the only e cig that gives a smoking type sensation (whether it's true or not, I haven't had any interest in finding out), this might just be a sell off to reduce the cost of the acquisition.

 

[Oliver]

Well, I think (from memory) Imperial bought the global portfolio - I don't think Dragonite has any claims over them any longer.

I'm leaning towards the antitrust issue- I was just reading that it could hold the transaction back by up to a year before the green light is given.

I think Reynolds sees Blu as a lesser brand and clearly holds great stock in its Vuse product. I was surprised because I thought that Blu was actually the reason that Reynolds wanted to acquire Lorillard!

Also, BAT holds a 42% stake in Reynolds (and will continue to do so due to share adjustments), Reynolds and BAT have announced that they will be working on joint e-cigarette projects.

Interesting times...

 

[Jman8]

I'm leaning towards the antitrust issue- I was just reading that it could hold the transaction back by up to a year before the green light is given.

From layperson perspective, it looks and quacks like antitrust. But from technical legal perspective, I'm (strictly) guessing that it is not.

Interesting times...

You got that right, Sparky. Er, I mean SmokeyJoe.

 

[Bill Godshall]

Since Imperial was the only major international tobacco company that doesn't market e-cigs, it makes sense for them to buy blu.

And since Imperial (which bought Dragonite's patents) is suing blu (and many other e-cig companies), that lawsuit against blu will end quickly (but Imperial will continue suing the other e-cig companies).

With Imperial's purchase of Kool, Salem, Winston, Maverick and blu eCig brands from Reynolds, Imperial would become the third largest cigarette company in the US (as Imperial has very little presence here now) and the largest e-cig company in the US.

I suspect that the ANTZ and some left wing politicians will urge the FTC to block Reynolds' purchase of Lorillard, but I doubt the FTC will block it.

 

[DC2]

Subscribing to thread...

 

[Bill Godshall]

More details at
Reynolds American to Buy Lorillard for $25 Billion - WSJ
and AP article at
Tobacco Firm Reynolds American to Buy Lorillard - ABC News

The stated reason Reynolds is selling blu and 4 cigarette brands (two of which are menthol brands) to Imperial is to avoid antitrust challenges in US. But this also makes sense from a business perspective, as Reynolds doesn't want to own/market both Vuse and blu (which will compete against each other), and doesn't want to own/market Kool and Salem (both dying menthol brands), which compete against Reynolds' now largest brand Newport (the king of menthol).

 

[Bill Godshall]

Reynolds American Form 8-K (filed with SEC) delineates purchase of Lorillard, sales of brands to Imperial Tobacco, sales of stock to British American Tobacco
Reynolds American, Inc. - Current Report


And some spin from the Economist

Economist – Reynolds and Lorillard: Smoke Rings
http://www.economist.com/blogs/schumpeter/2014/07/reynolds-and-lorillard

By telling the news media they are selling Kool, Salem, Winston, Maverick and blu eCigs to Imperial Tobacco to prevent the Federal Trade Commission from blocking Reynolds purchase of (technically a merger with) Lorillard, Reynolds deployed a brilliant public relations and lobbying strategy (to prevent FC from blocking the deal) while simultaneously unloading undesired cigarette brands and an undesired e-cig brand (that would have otherwise competed directly against Reynolds' other cigarette and e-cig brands).


Since this is the biggest e-cig company/brand purchase in history that will forever change the US and international cigarette and e-cig markets, I was disappointed that nobody commented on this thread since my last posting yesterday (especially since lots of folks have posted comments on far less important threads, including a conspiracy theory thread).



.

 

[Bill Godshall]

Reynolds' brilliant strategy to tell the news media that antitrust concerns were the reason they are selling four undesired cigarette brands and an undesired e-cig brand to Imperial will also help expose the hypocrisy of those who might urge FTC to block the deal, as the most likely candidates to do so are CTFK, Glantz, other ANTZ groups, Public Citizen and their left wing Democrat allies in Congress (i.e. Durbin, Waxman, Harkin, Blumenthal, Brown, Merkley, Markey, etc.).

Please note that these are the same folks who praised the State AGs for the 1998 Master Settlement Agreement (that protected the largest cigarette companies by screwing lots of little cigarette companies).

Then from 2004 to 2009, they aggressively lobbied Congress to enact the FSPTCA, which I called the Marlboro Monopoly Act because it protected cigarettes, PM and other large tobacco companies, while screwing smokeless tobacco and small tobacco companies.

And for the past two years these same folks have been aggressively lobbying the FDA (and Obama) to impose the deeming regulation, which protect cigarettes, would ban >99% of e-cig products, and would give the entrepreneurial e-cig industry to the Big Tobacco companies.

So those who are most likely to yell "antitrust" and urge FTC to block the Reynolds/Lorillard merger are those that have been lobbying (for more than 15 years) for totally unwarranted laws that protect cigarettes and the biggest cigarette companies from free market competition by far less hazardous smokefree alternatives and from hundreds of smaller competitors.

 

[Kent C]

Reynolds' brilliant strategy to tell the news media that antitrust concerns were the reason they are selling four undesired cigarette brands and an undesired e-cig brand to Imperial will also help expose the hypocrisy of those who might urge FTC to block the deal, as the most likely candidates to do so are CTFK, Glantz, other ANTZ groups, Public Citizen and their left wing Democrat allies in Congress (i.e. Durbin, Waxman, Harkin, Blumenthal, Brown, Merkley, Markey, etc.).

Please note that these are the same folks who praised the State AGs for the 1998 Master Settlement Agreement (that protected the largest cigarette companies by screwing lots of little cigarette companies).

Then from 2004 to 2009, they aggressively lobbied Congress to enact the FSPTCA, which I called the Marlboro Monopoly Act because it protected cigarettes, PM and other large tobacco companies, while screwing smokeless tobacco and small tobacco companies.

And for the past two years these same folks have been aggressively lobbying the FDA (and Obama) to impose the deeming regulation, which protect cigarettes, would ban >99% of e-cig products, and would give the entrepreneurial e-cig industry to the Big Tobacco companies.

So those who are most likely to yell "antitrust" and urge FTC to block the Reynolds/Lorillard merger are those that have been lobbying (for more than 15 years) for totally unwarranted laws that protect cigarettes and the biggest cigarette companies from free market competition by far less hazardous smokefree alternatives and from hundreds of smaller competitors.

And it's the same type of individuals - progressives - who created the antitrust laws. It has created cartels and companies too big to fail. Just the opposite of the stated intent of the those who promoted it.

Coercive monopoly - Wikipedia, the free encyclopedia

 

[TyPie]

Thank you Bill, Kent, et al, for the history and perspective on BT, the ANTZ, big business, and others operating behind the scenes.
I am a relative newbie on the history, but I am attempting to get caught up. Please keep your perspectives on things coming.

Interesting how quitting smoking and changing to e-cigs has opened up a whole new world of mystery, intrigue and drama for us just following the machinations of Big Tobacco, the FDA, the ANTZ, e-cig companies, propagandists, lobbyists, and others. There is a DEFINITELY a book in here somewhere. Would make for some fascinating reading, and perhaps, a movie to boot. (The WOLVES of BIG TOBACCO, anyone?). Villians, scoundrels and thieves, all of them, it seems......

 

[Jman8]

So those who are most likely to yell "antitrust" and urge FTC to block the Reynolds/Lorillard merger are those that have been lobbying (for more than 15 years) for totally unwarranted laws that protect cigarettes and the biggest cigarette companies from free market competition by far less hazardous smokefree alternatives and from hundreds of smaller competitors.

Most of what they are up to seems utterly backwards to me.

Kids can't use this. Really? Cause, kids are using it every year since I've been alive. Perhaps, you are on the wrong side of Reason to keep preaching kids can't, when kids in fact do. Thus far your scare tactics, trumped up data and political games aren't doing a whole lot to match with your version of the way things must go.

Personally, I'd rather be blunt about the core issues than dance around them.

 

[Bill Godshall]

Here are two articles highlighting Imperial's purchase of blu eCigs.

Feeling blu? E-cig company spun off in major tobacco deal (with excellent comment at the end by SFATA's Cynthia Cabrara)
Feeling blu? E-cig company spun off in major tobacco deal

Imperial Tobacco’s Cooper adds blu to take e-cigarette leap
Imperial Tobacco


Unless Imperial negotiates new contracts with 100,000+ US retailers, the number of US retailers that sell blu is likely to decline once Imperial takes over the brand (as Lorillard has contracts with far more US retailers than does Imperial, and Lorillard's contracts provide more/better shelf space at retail locations).

 

[zoiDman]

...

Since this is the biggest e-cig company/brand purchase in history that will forever change the US and international cigarette and e-cig markets, I was disappointed that nobody commented on this thread since my last posting yesterday (especially since lots of folks have posted comments on far less important threads, including a conspiracy theory thread).

There has been Talk for Months about Reynolds acquiring Lorillard. But todays WSJ article was the First I heard that it would Probably happen.

And was Very Surprised to hear that Reynolds would Divest Blu to Imperial if the deal Does go thru.

I started this Thread...

http://www.e-cigarette-forum.com/fo...76-reynolds-buying-lorillard-but-not-blu.html

... but it was Closed do to this one having been started Already.

 

[zoiDman]

BTW - I wonder if Blu being a 510 Threaded Device and the Vuse being a Proprietary Connector played any Role in Reynolds spinning off Blu at the time of Sale?

 

[zoiDman]

BTW2 - I believe the Buy Out for Lorillard Stock is $50.05/Share plus .2909/Share of Reynolds Stock.

 

[Gato del Jugo]

I think Reynolds sees Blu as a lesser brand and clearly holds great stock in its Vuse product. I was surprised because I thought that Blu was actually the reason that Reynolds wanted to acquire Lorillard!

Reynolds wanted Newport, which from what I understand, is a huge chunk of Lorillard's revenue & has a huge chunk of the menthol market, which I believe is still growing.. Lorillard has also been leveraging this popularity of the Newport brand & has been pushing into the non-menthol market...

UK-based Imperial, which is international & doesn't really have much of an e-cig presence, probably didn't like blu/Lorillard's acquisition of UK's SkyCigs in their own backyard.. Imperial snags up the Dragonite patents & uses that as a threat..


The chess game continues.. Basically a further carving up of the tobacco & e-cig markets.. If this deal goes through, I wouldn't be surprised to see blu start leaving the US market (with Reynolds trying to fill the void with Vuse, piggybacking off Newport's distribution power) & blu expanding further internationally, instead...


Anyway, interesing comment from Dr. Gilbert Ross over at WSJ...


11:38 am July 16, 2014
Gil Ross, MD/ACSH wrote:

The future of “the tobacco industry” in the west is in low-risk nicotine delivery products/technology, period. E-cigs/vapors/tanks/mods, whatever: smokers are wising up to the benefits of using these devices to finally escape the deadly grip of cigarette-derived nicotine addiction, shunning the near-worthless FDA-approved NRTs and toxic drugs, despite the FDA/CDC/CTFK/UCSF/ACS/ALA/AHA corrupt warnings not to even try them. ‘Cigalikes’ eg blu/NJOY led the way, but flavors and customized N levels are the wave of the future. Interesting that the RAI/LOR/IMP “merger” was provoked by massive DECLINES in cig sales and the need to keep up with the e-cig market, yet one never–NEVER–hears a peep about this public health miracle [cig sales down means major declines in the fifty or so smoking-related diseases that kill almost half million Americans each year] amidst the hype warning about imaginary dangers of ecigs/vapors. Those running our “public health” establishment should be held to account for their malpractice bordering on criminality. Gil Ross MD/ACSH

No Room For America’s #1 E-Cigarette in Tobacco Mega-Merger - Corporate Intelligence - WSJ

 

[zoiDman]

And to make this Acquisition more Interesting, there are some who are saying that Lorillard's Board did Not Ask Enough for Sale of Lorillard Assets and Holdings.

INVESTOR ALERT: Levi & Korsinsky, LLP Announces Investigation of Lorillard Inc. and Its Board of Directors In Connection With the Sale of the Company to Reynolds American Inc. | Business Wire

 

[Gato del Jugo]

And to make this Acquisition more Interesting, there are some who are saying that Lorillard's Board did Not Ask Enough for Sale of Lorillard Assets and Holdings.

INVESTOR ALERT: Levi & Korsinsky, LLP Announces Investigation of Lorillard Inc. and Its Board of Directors In Connection With the Sale of the Company to Reynolds American Inc. | Business Wire

Ambulance-chasers gotta eat, too, you know..


Stuff like this isn't all that uncommon in the world of public securities..

They're basically advertisements to try to drum up some business for these law firms...

 

[zoiDman]

Ambulance-chasers gotta eat, too, you know..


Stuff like this isn't all that uncommon in the world of public securities..

They're basically advertisements to try to drum up some business for these law firms...

Yeah... And Lawyers have a way of Making Money no matter what the Outcome is.

Although with Lorillard Trading at around $60 right now, I can see why Some are calling the Terms of the Sale Questionable.

I also think that Some Investors are Also a bit Miffed because they saw Lorillard purchase of Blu as the Deciding Factor as to Investment.