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Conwood Company, LLC, is changing its name to American Snuff Company, LLC, effective Jan. 1, 2010. Conwood, the nation's second largest manufacturer of smokeless tobacco products, is an operating company of Reynolds American Inc. ( RAI).
The company name change will not affect any of the company's operations, products or staffing levels.
"Reassuming our historical company name emphasizes our commitment to the core values on which our company was founded," said Bryan K. Stockdale, Conwood's president and chief executive officer. "We are focused on delivering the highest quality smokeless tobacco products to our customers and adult tobacco consumers, and returning to our historical company name drives that home."
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COMMONWEALTH BRANDS, INC.; CONWOOD COMPANY, LLC; DISCOUNT TOBACCO CITY & LOTTERY, INC.; LORILLARD TOBACCO COMPANY; NATIONAL TOBACCO COMPANY, L.P.;and R.J. REYNOLDS TOBACCO COMPANY,
v.
UNITED STATES OF AMERICA; UNITED STATES FOOD AND DRUG ADMINISTRATION; MARGARET HAMBURG, Commissioner of the United States Food and Drug Administration; and KATHLEEN SEBELIUS, Secretary of the United States Department of Health* and Human Services, . . .
WHEREFORE, Plaintiffs pray that this Court:
(A) enter a judgment declaring the Act’s speech restrictions, both individually and collectively, to be an unconstitutional abridgement of Plaintiffs’ free speech rights under the First Amendment to the United States Constitution;
(B) enter a judgment declaring that the Act’s warning label and black-and-white text provisions, individually and collectively, effect an unconstitutional taking in violation of the Fifth Amendment to the United States Constitution;
(C) enter a judgment declaring that the Modified Risk Tobacco Products provision violates Plaintiffs’ due process rights under the Fifth Amendment to the United States Constitution;
(D) enter a judgment declaring that the provision allowing modification by the Secretary of the outdoor advertising ban violates Plaintiffs’ due process rights under the Fifth Amendment to the United States Constitution;
(E) enter a judgment declaring that the Act’s restrictions herein challenged collectively effect an unconstitutional taking in violation of the Fifth Amendment to the United States Constitution;
(F) enter a judgment declaring that the Act’s provisions allowing the enactment of additional or more stringent laws is an unconstitutional infringement of Plaintiffs’ free speech
rights and an unconstitutional delegation of legislative power to entities outside the Legislative Branch;
(G) enter, after hearing, a preliminary injunction, pending final resolution of this action, enjoining Defendants from taking any action to enforce the Act;
(H) enter a permanent injunction enjoining Defendants from enforcing the Act’s restrictions herein challenged; and
(I) grant Plaintiffs such additional or different relief as it deems just and proper, including an award of reasonable attorneys’ fees and the costs of this action. 6. In short, while each of these provisions individually violates the Constitution, collectively, the Act’s provisions cut off nearly every currently-available avenue of tobacco advertising and marketing. In so doing, they run afoul of Plaintiffs’ rights to free speech and due process, and effectuate an unconstitutional taking of private property, in violation of the First and Fifth Amendments by, among other things, chilling Plaintiffs’ right to participate in scientific and political debates surrounding their products, unduly restricting Plaintiffs’ right to engage in commercial speech, and confiscating Plaintiffs’ packaging, advertising, and intellectual property for an anti-tobacco message drafted by the Government. Plaintiffs therefore respectfully request that this Court declare the challenged provisions of the Act in violation of the First and/or Fifth Amendments to the United States Constitution and enjoin the Government from enforcing these unconstitutional provisions.
At least 15,000 purchasers of chewing tobacco in Massachusetts could be eligible for a piece of a $10.65 million class action settlement with U.S. Smokeless Tobacco Co., according to a lawyer for plaintiffs who sued the company.
The plaintiffs’ legal team, which had alleged that UST artificially inflated the cost of chewing tobacco through its large market share, has launched a Web site to explain to consumers how they can access their share of the settlement.
Frequent purchasers of chewing tobacco could be eligible to get up to $700 depending on how many UST products – which include the Copenhagen and Skoal brands – they purchased from Jan. 1, 1990, through May 21. Infrequent purchasers could get $25 to $100.
Robert Bonsignore, one of the lawyers who represented the plaintiffs, said he was initially approached by chewing-tobacco users about filing a lawsuit after Conwood, a competitor of UST’s, had made similar claims against the company.
Tobacco products, because of their addictive qualities, remain a relatively unscathed market even in uncertain economic times. And with the market ups and downs, these businesses could even see an increase in sales from smoking clientele looking to quell their nerves.
However, the steady cash returns from tobacco stocks come with some tradeoffs:
* They offer limited growth prospects, especially as tobacco customers die off (as smokers tend to suffer greater death rates actuarially than nonsmokers). * These stocks represent investments in what some refer to as a "sin" sector, eschewed by "socially responsible" portfolio managers. * These stocks' companies stand in the crosshairs of some former-customers-turned-angry-plaintiffs as well as tax-hungry legislators. * Anti-smoking forces have been taking aim at retail distribution of cigarettes as well as venues for smoking and advertisements that they claim are targeting youth to replace the base of mature smokers.
These built-in risks, not to mention the currently treacherous stock market, should be enough to compel any investor interested in investing in tobacco stocks to first consider carefully their investment.
Still, if an investor is unbothered by moral arguments against tobacco and is willing to test the roily investment waters, some arguments exist for considering tobacco stocks.
Reynolds American Inc. (NYSE: RAI) today completed its $3.5 billion acquisition of a holding company that owns Conwood, the nation's second largest manufacturer of smokeless tobacco products, from business interests of the Pritzker family.
The transaction, which was announced April 25, 2006, received required approval from the Federal Trade Commission on May 23, 2006. Reynolds American funded the $3.5 billion acquisition purchase price with the net proceeds of its private offering of $1.65 billion of senior secured notes and borrowings under its $1.55 billion senior secured term loan facility, each of which also closed today, as well as available cash. In addition, RAI entered into a $550 million revolving credit facility today.
"We are excited about the growth prospects Conwood brings to Reynolds American," said Susan M. Ivey, RAI's chairman and chief executive officer.
"Conwood's strong, well-positioned brands are gaining share in the growing moist snuff market, and its high margins will enhance our ability to continue to provide an excellent return to our shareholders."
Cigarette maker Reynolds American Inc. said Wednesday it completed a $3.5 billion purchase of the holding company that owns Memphis, Tenn.-based Conwood, a smokeless tobacco company.
Reynolds American funded the acquisition with proceeds of $1.65 billion of senior secured notes and loans under its $1.55 billion senior secured term loan facility and available cash.
Reynolds American plans to combine its Tucker, Ga.-based Lane Limited subsidiary with Conwood to drive growth in other tobacco products.
Reynolds American Inc., the nation's No. 2 cigarette maker, said Tuesday it has cleared a hurdle at the Federal Trade Commission toward its $3.5 billion purchase of chewing tobacco company Conwood.
The company said the Federal Trade Commission granted it early termination of a waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
Reynolds American Inc. (NYSE: RAI) announced today that it is planning a private offer of $1.65 billion aggregate principal amount of senior secured notes due 2013, 2016 and 2018 (the "Notes"). RAI intends to use the net proceeds from this offering, together with available cash and borrowings under a new secured term loan facility, to fund its previously announced agreement to acquire a to-be-formed holding company that will own Conwood Company, L.P., Conwood Sales Company, L.P., Rosswil LLC and Scott Tobacco LLC (collectively, "Conwood").
Some analysts wondered after the announcement whether it might also make UST a more attractive acquisition target. The stock hit a month high of $44.92 the day Reynolds announced the Conwood deal. Cigarette companies are strong cash generators, and the most likely purchaser would seem to be Philip Morris, a unit of Altria and the maker of the dominant Marlboro cigarette brand. Both companies declined to comment, but after the price Conwood just pulled down, it would certainly be a costly target.
Reynolds American Inc., the second- largest U.S. cigarette company, will jump into the smokeless tobacco market by buying Conwood, maker of the Kodiak and Grizzly brands, for $3.5 billion.
The purchase will give Reynolds the second-largest U.S. manufacturer of snuff and chewing tobacco, the Winston-Salem, North Carolina-based company said in a statement. Conwood is being sold by Chicago's Pritzker family, which controls assets including the Hyatt hotel chain.
Reynolds, the maker of Camel, Doral and Winston cigarettes, is trying to hold on to customers switching to smokeless brands such as UST Inc.'s Copenhagen and Skoal as restaurants and employers ban smoking. The purchase may spur rivals including Altria Group Inc. to enter the $3.8 billion-a-year market, which is growing 5 percent a year.
``The smokeless business is attractive for its growth,'' said Herb Achey, an analyst at New York-based U.S. Trust, which owns Altria, Reynolds and UST shares among about $107 billion in assets. ``We view it as a strategic initiative for Reynolds and Philip Morris.''
Reynolds American Inc. (NYSE: RAI) has agreed to acquire a holding company that owns Conwood, the nation’s second largest manufacturer of smokeless tobacco products, for $3.5 billion. The holding company is owned by business interests of the Pritzker family.
“Conwood provides us with a significant, strategic platform within the growing moist snuff category that would have taken years to build,” said Susan M. Ivey, chairman and chief executive officer of Reynolds American. “The moist snuff category has been growing at 4 percent to 5 percent for the past five years. Clearly, we’re excited by this unique opportunity to gain immediate scale and strength in the category.” . . .
Conwood is the only company to compete in all five segments of the U.S. smokeless tobacco industry, manufacturing moist and dry snuff; and loose leaf, plug and twist chewing tobaccos. Conwood holds the No. 1 or No. 2 position in every segment of the smokeless tobacco market. Moist snuff accounts for more than 70 percent of Conwood’s sales, led by both its premium-priced Kodiak brand and its rapidly growing value-priced Grizzly brand.
Conwood, which traces its roots back to the 1782 founding of the Garrett Snuff Company, operates seven facilities and employs about 900 people in Tennessee, Kentucky and North Carolina.
Reynolds American is also the parent company of R.J. Reynolds Tobacco Company; Santa Fe Natural Tobacco Company, Inc.; R.J. Reynolds Global Products, Inc.; and Lane Limited. Conwood will operate as a subsidiary of Reynolds American. Bill Rosson, Conwood’s chief executive officer, will report to Jeffrey A. Eckmann, Reynolds American’s executive vice president of strategy and business development. Santa Fe Natural Tobacco Co., R.J. Reynolds Global Products and Lane Limited also report to Eckmann.
After months of suggesting both Philip Morris USA and R.J.Reynolds tobacco companies were going to enter the smokeless-tobacco category with new, original products in the first half of this year, a tobacco stock analyst has changed her tune and is now speculating that one of the two companies will likely purchase Conwood Sales Co., makers of the Kodiak and Grizzly brands of moist smokeless tobacco, among other products.
“We anticipate that PM USA and Reynolds will be the two main bidders for Conwood, though, offering fewer synergies, we do not discount the possibility of Lorillard at least looking at the company,†Citigroup analyst Bonnie Herzog wrote in an industry note titled “A Race to Acquire Conwood.â€
Speculation that Altria Group Inc.'s (MO) Philip Morris USA or Reynolds American Inc. (RAI) may enter the smokeless tobacco market through an acquisition continues to smolder.
The latest Wall Street firm to add tinder to the idea is Citigroup, previously skeptical of long-running suggestions that either cigarette maker might try to enter the category through an acquisition of UST Inc. (UST).
Citigroup said Conwood Co. LLP, a privately held Memphis, Tenn., company controlled by the wealthy Pritzker family of Chicago, would help either Philip Morris or Reynolds quickly grab about 25% share of a category expected to grow 4% to 5% annually.
UST Inc. (NYSE: UST) announced today that it took significant steps to resolve the remaining antitrust claims filed against it as a result of the Conwood litigation.
"We concluded that it was in the best interest of our shareholders to reduce the uncertainty and risk we face by having these lawsuits pending in the courts and are pleased that we can move forward," Vincent A. Gierer Jr., chairman and chief executive officer, said.
The company said it has reached agreement in a civil suit brought by Swedish Match North America Inc. in the Western District of Kentucky against its U.S. Smokeless Tobacco Company (USSTC) subsidiary and other affiliated companies alleging damages under the antitrust laws. Under terms of the agreement, UST will pay $200 million. In addition, UST will transfer its cigar business to Swedish Match. . . .
"These actions allow us to focus on growing the smokeless tobacco category, thereby enhancing shareholder value. We believe that USSTC and Swedish Match share a common interest in helping to advance the interests of the smokeless tobacco industry, particularly in light of the debate regarding the role that smokeless tobacco can play in a comprehensive tobacco harm reduction strategy," Gierer said.
UST Inc. (UST) said Thursday it was served with summons and lawsuits seeking class-action status filed by plaintiffs in various states in May and June, alleging violations of either state antitrust laws or consumer protection laws, or both, in the sale of the company's smokeless tobacco products.
In its quarterly report filed with the Securities and Exchange Commission, the company said it was served June 28 with a summons and a complaint seeking class-action status by a plaintiff in Massachusetts regarding the purchase of UST's smokeless tobacco products from Jan. 1, 1990, to the present, alleging violations of the state's consumer protection act.
The company said it was served with similar summons and complaints seeking class-action status . . .
UST said all of the actions are derived from previous antitrust action brought against the company by its competitor, Conwood Co., the maker of Kodiak snuff.