Reynolds America, Inc. agreed to acquire Lorillard in a cash-and a stock transaction valued at $68.88 million per Lorillard share -- a total of $27.4 billion dollars.
Mayors from Greensboro and Winston-Salem are reacting to the merger of Reynolds American and Lorillard.
WINSTON-SALEM, N.C. -- Reynolds American, Inc. announced Tuesday it has agreed to acquire Lorillard in a cash-and a stock transaction valued at $27.4 billion dollars -- $68.88 per Lorillard share.
In the deal, Reynolds, American, Inc. is assuming net debt.
After the transaction, Reynolds, American, Inc. is projected to have more than $11 billion in revenues and approximately $5 billion in operating income.
Reynolds American, Inc. also has reached an agreement with Imperial, the fourth-largest international tobacco company. In that agreement, Imperial will purchase Kool, Salem, Winston, Maverick and blu eCigs brands for a total of $7.1 billion in cash. Reynolds American, Inc. said it expects to gain net cash proceeds of $4.4 billion after taxes.
Winston-Salem Mayor Allen Joines said it's great news for the city and its future. "I feel very confident that Winston-Salem is going to be a strong beneficiary of this acquisition and look forward to continued job growth here in Winston-Salem."
It's a different story in Greensboro. Mayor Nancy Vaughan said she's concerned Imperial might cut some jobs. "There hasn't been a commitment that we're going to keep 100% of the jobs, that the corporate headquarters will stay there. Somebody is going to be adversely affected, but on the whole, I think we're able to keep the majority of jobs intact."
If the deal goes through, Imperial will get certain assets owned by Lorillard, including the manufacturing and R&D facilities in Greensboro and approximately 2,900 employees (including a national sales force).
This agreement with Imperial relies on the completion of Reynolds American's acquisition of Lorillard.
Related: Pat Danahey with Greensboro Partnership weighs in on what this means for Winston-Salem and Greensboro. Watch Video below:
Reynolds American, Inc. announced Tuesday it has agreed to acquire Lorillard in a cash-and a stock transaction valued at $27.4. Pat Danahey, with Greensboro Partnership, explains what it means for Greensboro & Winston-Salem
In a conference call Tuesday morning, Reynolds American, Inc., Lorillard and Imperial said the deal is likely to be completed by early 2015.
Reynolds American, Inc. and Lorillard said they both have filed with the U.S. Securities and Exchange Commission. Shareholders and regulators still need to approve the merger.
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Greensboro Mayor Nancy Vaughan has released the following statement about the acquisition of Lorillard. "I certainly understand the business and economics aspect of this deal, but the Lorillard brand will be dearly missed in the Greensboro community. My focus continues to be on the 2900 employees of Lorillard and I remain hopeful that company leaders will hold true to their commitment to retain as many jobs as possible. I also encourage Reynolds and Imperial Tobacco to maintain the high level of corporate generosity that Lorillard was long known for in the Greensboro community."