Reynolds American — Merger or Acquisition (January 2017)
21 slides from Reynolds American's merger presentation, Jan 17, 2017
Slide 1: Schedule 14A Information - Reynolds American Inc.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. ) Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐ Check the appropriate box: ☐ Preli
Slide 2: Filing Party and Date Filed
(3) Filing Party: (4) Date Filed:
Slide 3: Proposed Acquisition of Reynolds American Inc. by British American Tobacco p.l.c.
Acquisition January 2017British American of Reynolds Tobacco American p.l.c. Proposed Inc.
Slide 4: Important Notice - Forward-Looking Statements
Important This Group”, citizen require The sources Forward Certain of conditions, These “estimate,” could data conditions Proposed uncertainties suppliers international effectively position, Additional K, reliance contained No would the Quarterly statement information within presentation cause Propo
Slide 5: Important Additional Information
Important Additional made BAT security Proposed [email protected] Reynolds). Participants Reynolds respect www.bat.com changed with documents Non-solicitation offer, requirements This memberthe communication and solicitation through toholders SEC. of since Reynolds Transaction. and the notice informatio
Slide 6: Compelling Strategic Rationale
Compelling Strategic Creates markets aPortfolio Rationale stronger, strategic oftruly strong, rationale global growing tobacco global and Next brandsGeneration Global NGPProducts business (NGP) withcompany a world class Direct pipeline access to the attractive US market A balanced presence in high g
Slide 7: Compelling Financial Rationale
Compelling At financial Financial least $400m profile Rationale financial annualised with commitment rationale cost synergies to maintaining anticipated a solid by the investment end of year grade 3 EPS credit andrating DPS Enhanced accretive in cash firstgeneration full year, Continued targeting mi
Slide 8: Transaction Highlights
Transaction Reynolds Values Represents tradable Key BAT Financing transaction *Based FX asoffer has ateach on instrument 16 secured shareholders terms closing to aJanuary highlights Reynolds premium target a prices US$25bn around 2017 share of will and 26%receive 3.0x atfully $59.64* to by the commi
Slide 9: Transaction Timing and Approvals
Transaction regulatory Timing andapprovals closing highlights is recommended Transaction by the expected Transaction to close Committee in Q3 2017 of Reynolds Break fee and of up thetoBoards $1 billion of both payable companies by either Subject BAT or to Reynolds approval of under Reynolds certaina
Slide 10: Timeline and Next Steps
SEC Timeline Reynolds Subject Expected BAT New majority A The US Completion shareholder proxy and timing transaction merger process shareholder p.l.c. BATJapan to statement of closing shareholder shares regulatory intends of the constitutes is isexpected the anti-trust subject circular, expected out
Slide 11: BAT - Proven Track Record of EPS Growth
BAT—A 2006 0% 11% -4% -12% At 10% Source. constant 5% -5% 12% 9% 10% average 2007 -10% 0% Company’s proven -4% 9% 2008 15% rates EPS 10%2009 track FXgrowth 10% financial translational 2010 record 10% at 2011 constant results of 8%growth… 2012 impact ascurrency 2013 published 20142012 2015EPS not res
Slide 12: BAT Dividend per Share Growth
. and CAGR 2006 148.1 Dividend 55.9 66.2 83.7 99.5 12% Source. returns 2007 154.0 Company’s per 2008 142.4 DPS share 2009 growth 134.9 financial 2010 126.5 2011 results 114.2 2012as 2013 published 2014 2015
Slide 13: Highly Attractive US Tobacco Market
Highly One Bn US 303 94 2,490 103 182 97 17 China … 9.8 7.7 5.9 4.2 Japan *Income Source: 88 17 with sticks 9.3 7.4 5.0 4.1 CAGR 269 32 of16 83 US Indonesia the 23 3.6 attractive low Euromonitor, 264 defined 81 2015 Russia 23 biggest 3.6 2015 20 cigarette 2.9 Value 20Russia –Germany as US 2.9 20E: t
Slide 14: A Unique Geographic Footprint for BAT
A unique BAT Volume EM Equivalent Developing Greater Source: DM BATproportion Company split EM geographic Post-Transaction Net 13DM packs Revenue/Pack US internal offootprint +8% Groupdata, USA volume Net NTO 2 packs Revenue will at current +5% come CAGR Developed from rates(2010-2015) high6growth p
Slide 15: Combined Companies Will Have Strong US Brand Portfolio
Combined +510 BAT 2.4% RAI +650 2016 Key 13.9% (a) brand Operating vs. bps 2.3% 8.3% Nielsen 2010 business share 1.5% 2.2% GDB Companies data No. 3.3% 7.7% will share 2YTD in 2.2% T40 have US Aug-16 market No. unique 3 (b) inshare(a) portfolio US Reynolds Fastest USof press market strong growing rel
Slide 16: Key Brand Share Growth Drivers
To0 drive Key 600 GDB Share 500 +90bps BAT +70bps +80bps +30bps 200 0+40bps 2010 Source: *Reynolds +90bps +150bps Companies’ Brand 400 2011 ps +40bps +50bps 300 Operating +80bps +110bps BAT—Nielsen Adjusted continued –2012 Share BAT +80bps Share 400 500 2013 Share* internal for +240bps 600 strong 70
Slide 17: Significant Opportunity in Next Generation Products
World60% Opportunity Tobacco BAT Significant RAI* 44% *Market BAT class shares RAI heating 35% presence Next toOperating based create 9%Closed Generation 5%in on truly the 2% Nielsen Companies vapour largest global n/aProducts Open data leading NGPwhere vapour markets NGP available, Hybrid brandspro
Slide 18: Compelling Strategic and Financial Rationale
Compelling Strategic Financial Creates markets At WACC least for a$400m Portfolio Rationale stronger, Rationale the strategic US ofof annualised by truly strong, and year global financial 5growing Strong cost tobacco synergies rationale financial global and Next brands anticipated profile Generation
Slide 19: Proposed Acquisition of Reynolds American Inc. by British American Tobacco p.l.c.
Acquisition January 2017British American of Reynolds Tobacco American p.l.c. Proposed Inc.
Slide 20: Cautionary Statement Regarding Forward-Looking Statements
Cautionary Statement Regarding Forward-Looking Statements Statements included in this communication that are not historical in nature, including financial estimates and statements as to regulatory approvals and the expected timing, completion and effects of the proposed transaction, are forward-look
Slide 21: Additional Information and Where to Find It
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BAT, RAI, THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and shareholders will be able to obtain free copies of the proxy statement/prospectus and other documents filed with the SEC by RAI and BAT thro
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