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Rothmans Inc. mails directors' circular to shareholders recommending acceptance of C$30 per share all cash offer 

Rothmans Inc. ("Rothmans" or the "Company") announced today that Philip Morris International Inc. ("PMI") has mailed its previously announced offer to all Rothmans shareholders to purchase all of the outstanding common shares of Rothmans for $C30.00 per share in cash (the "Offer"). The Offer and the take-over bid circular of PMI are accompanied by Rothmans' directors' circular which confirms that the Rothmans Board of Directors, acting upon the unanimous recommendation of its Special Committee, has determined that the Offer is fair from a financial point of view to the shareholders of Rothmans and is in the best interests of the Company and that the Rothmans Board of Directors is recommending that the shareholders accept the Offer and tender their common shares to the Offer.

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Rothmans Inc. announces take-over offer by Philip Morris International 

Rothmans Inc. announced today that it has entered into a definitive support agreement with Philip Morris International Inc. ("PMI") that provides for an offer to be made by PMI, by way of a take-over bid, to all Rothmans Inc. shareholders to purchase all of the outstanding common shares of Rothmans Inc. for C$30.00 per share in cash (the "Offer"). The Offer has the full support of the Board of Directors of Rothmans Inc. The transaction values Rothmans Inc. at approximately C$2 billion.

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Don't want to quit Rothmans? Just say no 

No tobacco company is ever going to score highly on the warm-and-fuzzy scale. But Rothmans took the "only-investors-matter" approach to extremes. With some of the fattest profit margins in Corporate Canada, the company can afford some sweet downtown office space. Instead it occupies a tower in a dumpy part of Toronto, close to nothing. Management does zero to court the press and eschews image makers. The company's head of corporate affairs - a title that in many companies is reserved for a professional spin doctor - is actually an ex-tobacco salesman.

The parsimony extends to how it pays management. . . .

The company is a textbook case of how it's usually better not to dilute a great business by diversifying into other, inferior businesses. (Had some other Canadian consumer firms learned that lesson - Labatt and Molson, we're looking at you - they might have retained their independence.) Rothmans refused to make wacky acquisitions. They simply let the cash pile up. When the pile got too high, they paid it out. You could have bought a share of the company for $8 seven years ago, collected $11.73 in dividends since then, and still own a security that's now worth nearly $30.

This, remember, is in a declining industry. . . .

Philip Morris is not really paying a knockout price. As part of the deal, it also got Rothmans to cancel its dividend, taking $24-million out of shareholders' pockets. (See Andy Willis' Streetwise blog for more on that.)

For investors, replacing Rothmans won't be easy.

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WASHBURN: Lack of ethics in business harms companies, individuals  

When the $1.15-billion fine against Imperial Tobacco and Rothmans' Benson & Hedges was announced last week, it was a paltry sum compared to the companies' actions. . . .

Socrates said, "Vice harms the doer." Even if no one ever finds out and we can get away with doing something wrong, the act hurts us more than it hurts the victims.

But in a cynical world, Socrates appears to be talking into the wind. No one pays attention to this kind of thinking any more. Since Gordon Gekko announced in the filmWall Street,"Greed is good. Greed works," a generation of MBA students has felt it had a license to do whatever it takes to make money.

And, this is the heart of the problem. When people lose trust in business, business loses even more. Business loses when we think every time a corporation sends out a press release, it is full of lies. . . .

Businesses need to take this issue of trust more seriously. It is true; one bad apple spoils the barrel. Not only does it undermine the fundamental economics of the 21st century, but it also deepens the pervasive cynicism, which is a trademark of our times. This distrust spreads like a cancer through all aspects of our lives.

If there is a way out, it will not be legislated. Morals cannot be successfully turned into laws. It is only the actions of individuals of conscience that will make this change possible. It is going to take a massive change of heart. Sadly, it is hard to see how that will happen.

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Rothmans deal presents challenges for Philip Morris  

Philip Morris International Inc.’s friendly $2-billion takeover of Canadian cigarette maker Rothmans Inc. may not be material in financial terms given the U.S. tobacco giant’s more than US$100-billion market capitalization, but it does increase its litigation exposure.

This factor, along with the extreme difficulty Philip Morris will have in bringing its brands to bear in Canada – it cannot use the Marlboro name, for example, since British American Tobacco plc owns the brand – has Citigroup’s Adam Spielman telling clients that he doesn’t like the deal.

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Is Philip Morris International Walking Back Into More Tobacco Litigation? 

But RBH is facing extensive litigation in British Columbia. While Philip Morris International already has some exposure to the costs of that litigation-because, after all, it owns 40% of RBH-with the acquisition it will be taking on all of the risk. Philip Morris doesn't believe the litigation poses much of a threat. Citigroup's Spielman disagrees.

Spielman also makes the case that the Canadian market isn't an auspicious one for Philip Morris, for several reasons. For one, PMI can't use the Marlboro brand name there . . .

But the bigger issue, Spielman says, is a massive C$10 billion lawsuit brought by British Columbia against the tobacco industry. The province is suing for state-sponsored health-care costs allegedly racked up because of the effects of tobacco products. The suit will be years in development-the trial is to start in late 2010-but it may have a large impact. Spielman chided, "we see it as an attempt by politicians to destroy an industry they regard as immoral. We do not believe it is rational either financially or in terms of public health." Even so, he expects other provinces, including Ontario, to file copycat suits.

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Rothmans deal presents challenges for Philip Morris 

Philip Morris International Inc.’s friendly $2-billion takeover of Canadian cigarette maker Rothmans Inc. may not be material in financial terms given the U.S. tobacco giant’s more than US$100-billion market capitalization, but it does increase its litigation exposure.

This factor, along with the extreme difficulty Philip Morris will have in bringing its brands to bear in Canada – it cannot use the Marlboro name, for example, since British American Tobacco plc owns the brand – has Citigroup’s Adam Spielman telling clients that he doesn’t like the deal.

He even had photos of du Maurier packs with a impotentcy-warning limp cigarette and stroke-worthy lung to demonstrate some of the challenges Canada presents.

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Philip Morris nabs Rothmans 

At the same time, Rothmans was ending its impressive 2008 fiscal year and negotiating settlements with the federal and provincial governments to resolve a prolonged RCMP investigation. Police alleged that between 1989 and 1996, Rothmans and Imperial exported tax-free cigarettes to locations in the United States near the Canadian border, helping smugglers get the smokes back into the country. The companies were allegedly trying to protect their market share in the face of soaring tobacco taxes and growing contraband cigarettes.

In early April, Philip Morris "came forward and said, 'I don't know whether this clarifies the situation or not but we would be interested in making an offer for all the outstanding shares of Rothmans Inc. The only thing we would like to see is some resolution of those discussions,' " Rothmans spokesman Barry Joslin said. "So they asked for clarity and certainty, in that regard, and those discussions moved forward."

Yesterday, Rothmans and Imperial announced they had settled the charges and will pay more than $1-billion in total fines and penalties over the next 10 years. Moments later, Rothmans and Philip Morris announced the takeover bid.

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Big tobacco to pay record fines after guilty plea 

Two of Canada's biggest tobacco companies will pay record-setting fines after pleading guilty to tax charges laid in connection with contraband cigarettes.

Imperial Tobacco Canada Limited and Rothmans Benson and Hedges pleaded guilty to "aiding persons to sell and be in possession of tobacco manufactured in Canada that was not packed and was not stamped in conformity with the Excise Act."

Imperial Tobacco will pay $200 million in fines and Benson and Hedges was fined $100 million.

"Based on our estimates, by (the companies) paying these fines, they will not be making any profits out of the (illicit) activities they had in the past," Revenue Minister Gordon O'Connor said at a press conference held in Ottawa on Thursday.

The companies have also committed to help combat contraband tobacco activities in Canada.

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Canadian Companies Settle Cigarette Smuggling Case 

Two Canadian tobacco companies agreed to pay criminal fines and civil penalties totaling about 1.15 billion Canadian dollars after admitting Thursday that they had aided cigarette smugglers.

An eight-year investigation of Imperial Tobacco Canada and Rothmans, Benson & Hedges by the Royal Canadian Mounted Police covered events beginning in the late 1980s. At that time, high Canadian taxes intended to discourage smoking prompted a wave of cigarette smuggling from the United States that continued for several years.

Under the settlement reached with the federal government and all of Canada's provinces, the companies acknowledged in a guilty plea on Thursday that they had known that cigarettes sold to wholesalers in the United States were swiftly returned to Canada for sale on the black market. . . .

Much of the cigarette smuggling took place through a Mohawk Indian reservation that spans the international border along the St. Lawrence River near Massena, N.Y.

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Imperial, Rothmans Agree to Pay C$1.15 Billion Over Smuggling  

Imperial Tobacco Canada Ltd. and Rothmans Inc., Canada's two biggest tobacco companies, agreed to pay about C$1.15 billion ($1.12 billion) in fines and penalties to settle charges they aided cigarette smuggling in the 1990s.

Imperial, the Canadian unit of the U.K.'s British American Tobacco Plc, was fined C$200 million after admitting it helped people sell untaxed cigarettes, the Royal Canadian Mounted Police said. Toronto-based Rothmans, which makes Benson & Hedges, also pleaded guilty and was fined C$100 million.

``These are the largest fines ever levied in Canada,'' Mike Cabana, the RCMP's assistant commissioner, said at a news conference in Ottawa. ``The message sent today is that no company is above the law.''

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Big tobacco to pay $1.15 billion over contraband product 

Two of Canada's biggest tobacco companies will pay $1.15 billion in criminal and civil penalties after pleading guilty to customs charges related to contraband cigarettes and smuggling.

Under separate court settlements in Montreal and Toronto on Thursday, Imperial Tobacco Canada Limited was fined $200 million and Rothmans Benson & Hedges (TSX:ROC) $100 million as part of the criminal charges.

The companies will pay another $815 million in civil damages to the federal and provincial governments over the next 15 years.

In total, Ottawa will receive $575 million, with the provinces getting the rest of the $1.15 billion.

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• Executives revealed how cigarettes got into Canada 

The investigation into Canada's three major tobacco companies for aiding and abetting smuggling in the late 1980s and early 1990s began eight years ago, after The Gazette ran a series of articles alleging the companies were the main black market suppliers.

Central to The Gazette stories were a tobacco smuggler, who has since committed suicide, and two former tobacco sales executives who oversaw a scheme to funnel billions of Canadian brand cigarettes to the black market.

Les Thompson, an RJR Macdonald sales executive, described in interviews in hotel rooms in Ontario and Quebec how RJR Macdonald (now called JTI-Macdonald) established separate offices and companies in Toronto and the United States to oversee the funnelling of its brands, like Export A, to smugglers. . . .

Another key witness is former RJR Macdonald vice-president Stan Smith, who was Thompson's boss. Smith pleaded guilty in Ontario in 2006 and was sentenced to eight months of house arrest. He had been co-operating with police since 2000. . . .

The articles also focused on the role played by Imperial Tobacco and Rothmans. Both companies sent huge shipments of Canadian brand cigarettes into the U.S. under the pretext they were supplying the duty-free market. In fact, the cigarettes were simply sold back into Canada. . . .

Smugglers told The Gazette that company sales representatives regularly showed up at the smuggling spots and warehouses near Cornwall and Buffalo, N.Y., to take inventory.

After The Gazette articles, in 1998 and 2000, Imperial and Rothmans both denied any role in the smuggling.

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PMI set to control third of Canada's market 

Consolidation in the global tobacco industry continued apace yesterday after Philip Morris International, the world's biggest listed tobacco company, agreed to buy Canada's Rothmans for C$2bn ($1.95bn) in cash.

The C$30-a-share offer, which is being recommended by Rothmans' board, represents a 17 per cent premium to the company's 20-day average trading price to July 30.

The deal, if successful, would give PMI control of a third of Canada's cigarette market, including the leading share of the country's fast-growing discount cigarette category.

The acquisition would be a first for PMI, which was formed after Altria spun out its overseas operations in March.

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Rothmans to be inhaled by Philip Morris in $2-billion deal: $30 per share 

Rothmans Inc. (TSX:ROC) is set to be taken over by Philip Morris International Inc. in a transaction that values Canada's last publicly traded cigarette company at $2 billion.

Rothmans said Thursday the offer of $30 per share in cash has been endorsed by the board of directors of the Toronto-headquartered company, whose origins date back to 1899.

The announcement followed immediately on the resolution of smuggling charges against Rothmans, Benson & Hedges Inc., the Canadian operating company which is owned 60 per cent by Rothmans and 40 per cent by Philip Morris.

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