Reynolds American (RAI) to sell Natural American Spirit Business to Japan Tobacco Group
Shares of Reynolds American Inc. were trading up +0.38 or +0.88 percent to $43.80 per share in Tuesday’s premarket after the company announced early this morning that it would be selling its Natural American Spirit international businesses to Japan Tobacco Group for approximately $5.0 billion. Reynolds American stock closed at $43.42, up +0.43 or +1.00 percent in Monday’s regular trading session.
Winston-Salem, North Carolina based Reynolds American Inc. is the second largest domestic tobacco company.
The Natural American Spirit brand name and trademarks associated with it, in addition to the international companies that market and distribute the brand outside of the United States, is the object of the sale to Japan Tobacco Group.
The international companies that will be sold to JT Group are based primarily in Japan and Europe, employ approximately 280 people and distribute and market the additive free, organic style cigarettes and rolling tobacco in Japan, Germany and Switzerland, the brand’s largest markets. The Natural American Spirit brand sells for a premium price in each competing market as it does in the United States market.
The sale does not include the rights to the Natural American Spirit brand name and its associated trademarks in the United States, U.S. territories, duty free locations or U.S. military outlets. The stateside businesses will be retained by the Santa Fe Natural Tobacco Company, a wholly owned subsidiary of Reynolds American.
Reynolds American’s President and Chief Executive Officer, Susan M. Cameron stated in the company’s press release that, “Natural American Spirit has achieved excellent international growth over the past several years. When backed by the strength of the JT Group’s international distribution, sales force and manufacturing capabilities, we believe that growth trajectory will not only continue, but accelerate.”
She continued saying, “We believe this sale once again demonstrates our commitment to creating value for our shareholders, and we believe the addition of Natural American Spirit to the JT Group’s brand portfolio will benefit their investors as well”. Ms. Cameron also said that once the deal is completed, the rights to all Reynolds American operating companies’ cigarette trademarks will be owned by other international tobacco companies, which will allow Reynolds American to concentrate on improving brand growth in the United States. The transaction is subject to approval by regulatory agencies in several countries, which are expected by early 2016. The deal is expected to close soon after the approvals are obtained.
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