Cases & Deals

Reynolds American acquires Conwood Tobacco Companies for $3.5 billion

Client(s) Reynolds American Inc.

Jones Day advised Reynolds American Inc. (RAI) in its $3.5 billion acquisition of a holding company that owned Conwood, which was the nation's second largest manufacturer of smokeless tobacco products. The holding company was owned by business interests of the Pritzker family. RAI funded the acquisition with $3.2 billion in new debt and $300 million in cash. RAI received financing commitments from Lehman Brothers Inc. and JPMorgan Chase Bank, N.A. for the debt necessary to complete the transaction.

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. Reynolds American will combine its Lane Limited subsidiary with Conwood in order to consolidate and drive the companies' portfolio of other tobacco products (OTP). Lane markets a wide range of specialty tobacco products, including cigars and little cigars; roll-your-own and pipe tobaccos; and Dunhill and other premium international cigarettes. The headquarters of the newly combined companies will be located in Memphis, and full integration is expected to be completed by the end of 2007.

In December 2006, the Financial Times reported that Reynolds American ranked among the top five U.S. companies to make large domestic acquisitions that year, based on the performance of the company's trading price after completion of the transaction.

In addition to M&A representation, Jones Day provided antitrust, employee benefits, environmental, and intellectual property advice regarding this transaction.