Monday, 12 May 2014

My debut in The Times biz section with a BAT story

Evening Betavillers. Sorry for the lack of posts today - I have been a bit busy doing some freelance work for the The Times. 

Indeed, some of my followers may have noticed that I had a piece about British American Tobacco published on the front page of The Times business section this morning but for those of you that haven't here is a link to the article:

The thrust of the story is that BAT has brought on board bankers from Deutsche Bank to work alongside UBS, the company's long-standing adviser and corporate broker, to look at acquisition opportunities in US.

My story comes after the FT Alphaville boys revealed earlier in the year that Reynolds American had hired corporate financiers from Lazard to look at buying Lorillard, the maker of Newport menthol cigarettes.

Now, my understanding from BAT's point of view is that "Reynolds buying Lorillard" for over $21 billion is just one of the options on the table.

My sources say BAT could just as easily buy the remainder of Reynolds that the London-listed company doesn't own. BAT already owns 42pc of Reynolds and its "standstill agreement" with the American company preventing the FTSE 100 giant from making a hostile offer ends on August 1, 2014.

The second option is for BAT to acquire Lorillard or possibly encourage Reynolds to buy Lorrilard and then sell certain brands back to the Benson and Hedges manufacturer.

This three-way deal option is complicated and also riddled with antitrust/competition issues, so may require help from some of BAT's rivals, such as Imperial Tobacco and Japan Tobacco.

There is also a third US-based company that BAT has been looking at buying, according to my sources familiar with the matter, although I have no idea which one the tobacco giant has set its sights on.

If anybody knows please don't hesitate to get in touch - anonymously, of course - with me by sending an email to   

UPDATE: The Wall Street Journal has does an interesting blog piece as a follow up to my story in The Times earlier in the week. Here is a link to the WSJ piece:

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