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Feb./March 2002 |
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R.J. Reynolds Buys Santa Fe Natural Tobacco
U.S.A.'s No. 2 Maker Outbids Canada's Rothmans, Inc. 
Santa Fe, NM - R.J. Reynolds Tobacco Holdings, Inc., completed its $340 million cash acquisition of Santa Fe Natural Tobacco Company on January 16. The company named RIchard Sander president and c.e.o. of the unit, succeeding Robin Sommers, who will remain with the company for an indefinite period of time to ensure a smooth transition.
Sanders previously served as senior vice president of marketing for R.J. Reynolds Tobacco Co. and president of that company's Sports Marketing Enterprises unit. On Dec. 11, Santa Fe terminated its earlier merger agreement with Rothmans Inc. of Canada which was announced on Sept. 27, 2001. It had consisted of $105 million in cash, $65 million in common shares of Rothmans, and $105 million in bonds. R.J. Reynolds had initiated a bidding war by subsequently offering $319 million in cash on Nov. 22, prompting Rothmans to raise its own bid of cash, bonds, and stocks to $353.7 million on Nov. 30. Reynolds countered with a $338 million on Dec. 3, and Rothmans said it would not make any new offers. "Natural American Spirit cigarettes will taste the same, smoke the same, and burn the samebecause our tobacco blend will not change," said Sommers. The company, which was founded in 1982, will operate with its current employees as a wholly-owned independent subsidiary of Reynolds, he said, with production of Natural American Spirit cigarettes continuing exclusively at the firm's Oxford, N.C. factory. The company has approximately 250 employees. |
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Marsh Wheeling Cigar Factory Closes
Production of "Stogies" Transfered to Indiana 
Wheeling, WV - The oldest cigar maker in America, Marsh Wheeling, has closed its historic 161-year-old cigar factory in Wheeling, West Virginia, once considered the heart of the cigar industry.
John Berger & Son Co. of Cincinnati, which bought Marsh in 1988, transferred production of the product line to Marsh's sister company, National Cigar Corp., which will continue to make the machine-made Wheeling Stogies at its facility in Frankfort, Ind. The move was prompted by declining sales, rising taxes, and fear of lawsuits: West Virginia is one of the few states where courts have recognized the right of healthy smokers to sue tobacco companies for medical screening. A landmark class-action suit against the nation's largest cigarette makers was rejected there by a jury in December, but Marsh Wheeling lawyer Jim Gardill said shareholders consider the law too much of a liability. "In this particular case, it played a role," he said. "You can get damages even though you've not been injured. That's a peculiar issue to explain to management in other states. It's just bizarre." The long, thin cigars that Miflin Marsh first rolled at his Wheeling home in 1840 were low-priced stogies aimed at the ordinary, middle-income smoker. Marsh sold the first stogies from a basket hooked on his arm, handing them out on steamboats that once worked the Ohio River. By the late 1800s, the cigars were so popular and inexpensive that taverns placed them on the counter like pretzels or toothpicks, free of charge. |
Denmark's MacBaren to Produce Pipe Tobaccos for Swedish Match
Svendborg, Denmark - MacBaren, Scandinavia's second-largest pipe tobacco producer, will replace Austria Tabak Scandinavia as the producer of several of Swedish Match's international pipe tobacco brands, effective July 1, 2002. The current facility, which Austria Tabak took over from Swedish Match in 1999, is slated to be closed down, with Austria Tabak moving its own cigarette production to other facilities in Austria.
The agreement with MacBaren -based in Svendborg, Denmark - covers only production. Both companies will retain their own marketing and sales organizations, remaining competitors in the pipe tobacco market. Pipe tobaccos accounted for 7 percent of Swedish Match's consolidated net sales in 2000. Among the brands that Mac Baren will be producing for Swedish Match is Borkum Riff. Mac Baren is a 150 year-old manufacturer of pipe tobaccos owned by the Halberg family. |
Vector Group to Acquire Medallion for $110m
Richmond, VA - Vector Group Ltd. announced that it has entered into a definitive agreement with The Medallion Company, Inc., a discount cigarette manufacturer headquartered in Richmond, Virginia, and its principal stockholder, whereby Medallion will merge into a subsidiary of Vector Group and Vector Group will acquire all related assets. The total purchase price will consist of $75 million in cash and $35 million in notes.
Medallion's principal discount brand is USA, but it also sells Virginian, Marlin, and Maxxon. Medallion's cigarettes are distributed nationally through a variety of retail outlets, including Walmart. "Medallion brings to Vector approximately 1.2 billion units annually with no payment obligation under the MSA, which should add significantly to Vector's earnings in coming periods," said Bennett S. LeBow, chairman and c.e.o. of Vector Group. The transaction is expected to close early in the second quarter of 2002 and is conditioned upon receipt of antitrust approvals and other customary closing conditions. |
Philip Morris Companies, Inc. Proposes Name to Change to Altria Group, Inc.
New York - Philip Morris Companies Inc., parent to Philip Morris USA, Philip Morris International, Miller Brewing and Kraft Foods, will ask shareholders to approve changing its name to Altria Group, Inc. The corporation stressed that its operating companies will all retain their current names.
Chairman and c.e.o. Geoffrey C. Bible told employees the change is being proposed for two reasons. The first is a need for clarity - distinguishing the tobacco companies from the parent company. The second is what he described as "the evolution of Philip Morris Companies Inc." "We are not the same family of companies we were just a few years ago," he said, citing the Nabisco acquisition and the Kraft initial public offering. The name "Altria" is derived from the Latin word "altus," said Bible, meaning to "reach higher." Shareholders will determine the fate of the proposed new name at the annual meeting in April 2002. |
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