A Trump Tax Cut Could Add $8.2 Billion to Reynolds Price Tag

A Trump Tax Cut Could Add $8.2 Billion to Reynolds Price Tag
  1. A Trump Tax Cut Could Add $8.2 Billion to Reynolds Price Tag
    When British American Tobacco Plc bid $47 billion last year to buy the 58 percent of Reynolds American Inc. that it doesn't own, the coast was clear. BAT's existing stake nullified the threat of counterbids and regulatory issues looked non-existent. Then Americans voted…

When British American Tobacco Plc bid $47 billion last year to buy the 58 percent of Reynolds American Inc. that it doesn’t own, the coast was clear. BAT’s existing stake nullified the threat of counterbids and regulatory issues looked non-existent. Then Americans voted in Donald Trump.

The president-elect and the Republican-controlled Congress want to slash the 35 percent tax rate for U.S. corporations. Trump wants to cut the rate to 15 percent, while House Republicans are seeking 20 percent.

For Winston-Salem, North Carolina-based Reynolds, which makes almost all of its $6 billion profit domestically, that’s a boon. For BAT, it’s a major headache, because the resulting higher earnings for Reynolds would justify an increase of as much as $8.2 billion in the bid, according to analysts.

“Trump’s tax proposals give Reynolds more ammunition to negotiate a bump to the offer,” Owen Bennett, an analyst at Jefferies, said by phone. Bennett estimates that a 25 percent corporate tax rate would increase the fair value of Reynolds by about $5 a share, while a cut to 15 percent would boost it by more than $10 a share.

BAT is offering cash and stock that’s worth about $55.39 a share for Reynolds holders. The proposal when it was made valued Reynolds, including net debt, at 16.3 times earnings before interest, tax, depreciation and amortization. That would be among the highest multiples ever paid in a tobacco merger, according to data compiled by Bloomberg. For London-based BAT, increasing the price may be unpalatable, but allowing the deal to slip through its fingers could be costly.

Besides missing out on milking more profit from the $116 billion U.S. smoking industry, BAT wouldn’t gain full access to Reynolds’ heated tobacco technology and thus would risk falling further behind behind Philip Morris International Inc. in the race to develop newer alternatives to smoking.

Reynolds rejected BAT’s initial offer and was seeking a higher price, people familiar with the matter said in November. Representatives for BAT and Reynolds declined to comment.

BAT isn’t the only company grappling with Trump’s imminent presidency. The…

  1. Emanuele Farneti: Vogue Italia's new editor-in-chief

    Us.fashionmag.com - Companies
    01.23 / 00:42 us.fashionmag.com
    The Italian editor has left his post at GQ Italia for the new top spot at Vogue Italia. He succeeds Franca Sozzani after her sudden death in December…
  2. Calls for Obamacare repeal leave South Dakotans worried

    Argusleader.com - Companies
    01.22 / 01:16 argusleader.com
    It’s been the top priority for the Republican Congress and new president, repeal and replace the Affordable Care A…
  3. 'I believe we're being stepped on,' one protester says as Women's March gathers--and she wasn't talking about the crowd

    01.21 / 16:20 latimes.com
    Women's marches live updates: Flagship Washington march underway Jan. 21, 2017, 8:15 a.m. A day after the presidential inauguration of Donald Trump, hundreds of thousands nationwide and around the world are marching in support of women's rights. • Huge crowds are still converge at flagship W…
  4. National Grid says costs of power would go up if Britain exits EU energy market

    Poandpo.com - Companies
    01.21 / 14:05 poandpo.com
    Taking Britain out of Europe's energy market could stymie development of new power links designed to help avert a looming supply crunch and also drive up the cost of imported European electricity, National Grid warned. National Grid said that each 1 gigawatt (GW) of new electricity interconnector capacity could reduce Britain's…
  5. U.S. investigating Herbalife over foreign bribery in China

    Poandpo.com - Companies
    01.21 / 14:04 poandpo.com
    The U.S. government is investigating Herbalife over whether it violated foreign bribery laws while conducting business in China, the company said in a regulatory filing. Herbalife, in which a billionaire investor and adviser to President Donald Trump is the single largest shareholder, said that the U.S. Securities and Exchange Commission had asked…
  6. Etihad Airways goes double daily to Düsseldorf

    Poandpo.com - Companies
    01.21 / 13:27 poandpo.com
    Etihad Airways announced its Abu Dhabi – Düsseldorf route will be operated 14 times a week with the addition of a new daily service, effective 26 March 2017. The double daily schedule will provide greater choice to local passengers travelling between Abu Dhabi and Düsseldorf, and further increase connectivity to and from Germany …
  7. Apple sues Qualcomm for $1bn, Qualcomm happy to unveil Apple's secrets in court

    Poandpo.com - Companies
    01.21 / 11:37 poandpo.com
    Apple filed a $1 billion lawsuit against supplier Qualcomm, a major supplier to both Apple and Samsung Electronics for modem chips that connect phones to wireless networks. The two companies together accounted for 40 percent of Qualcomm's $23.5 billion in revenue in its most recent fiscal year. In the lawsuit filed in U.S.…
  8. Berry Plastics completes acquisition of AEP Industries

    Poandpo.com - Companies
    01.21 / 10:23 poandpo.com
    Berry Plastics Group completed the acquisition of AEP Industries Inc. Berry issued 6.5 million common shares and paid $297 million as merger consideration in exchange for all of the outstanding shares of AEP common stock and outstanding AEP equity awards. Additionally, Berry paid$164 million to retire outstanding AEP debt. Berry…
  9. Dubai's utility provider invites bidders for 200MW solar power plant

    Poandpo.com - Companies
    01.21 / 09:47 poandpo.com
    All qualified bidders were requested to present proposals for a 200MW concentrated solar power (CSP) plant, the fourth phase of the Mohammed bin Rashid Al Maktoum Solar Park in Dubai, the Dubai Electricity and Water Authority (DEWA) said. "This 200MW CSP Plant will be operational by April 2021, since we intend to continue generating 1,000MW…
  10. City Council moving closer to accepting 'host city contract' for LA 2024 Olympic bid

    01.21 / 01:37 latimes.com
    As President Trump stood before the Capitol on Friday morning, swearing the oath of office, a group of Los Angeles City Council members gathered some 2,700 miles to the west to discuss their city’s bid to host the 2024 Summer Olympics. The simultaneous events might have seemed unrelated but t…
  11. On Trump's White House website, no more mention of climate change

    01.21 / 01:37 latimes.com
    Well, that was fast. Scientists, environmentalists and other concerned citizens were quick to notice that there is no longer any mention of climate change on the new White House website.  It’s a significant departure from how the site looked Friday morning, when President Obama was still in charg…
  12. Goldman Sachs Rejects Indonesian Businessman's $1.1 Bln Claim Over Share Trade

    Nm.nmcdn.us - Companies
    01.20 / 22:00 nm.nmcdn.us
    Goldman Sachs has rejected allegations by an Indonesian businessman who is seeking $1.1 billion in damages from the U.S. bank for making what he called unlawful trades in the shares of a property firm.The U.S. bank said the legal dispute may affect foreign…
  13. GE Looks for Sharp Cut in Corporate Tax Rate Under Trump

    Nm.nmcdn.us - Companies
    01.20 / 21:58 nm.nmcdn.us
    General Electric Co. is seeking a sharp cut in corporate tax rates under President Donald Trump but is bracing for U.S. sales of medical equipment to suffer if Congress delayschanging U.S. healthcare…
  14. These horses and their riders are the only California group in the inaugural parade

    01.20 / 21:20 latimes.com
    Inauguration Day live updates: 'American carnage stops' here and now, Trump says Jan. 20, 2017, 1:01 p.m. This is our look at President-elect Donald Trump's inauguration: A dark vision of America in Trump's inaugural address (analysis) Trump has not signaled that he will try to unify the…
  15. Razberi Survey Finds Video Costs, Quality and Reliability Are Top Surveillance Concerns

    Sdmmag.com - Companies
    01.20 / 21:10 sdmmag.com
    Razberi Technologies surveyed more than 100 security systems integrators and enterprise security leaders, discovering that when it comes to video surveillance systems, security professionals are most focused on maintaining quality at the right cost, simplifying management, and improving…
  16. Union deal falls through, city priorities questioned

    Argusleader.com - Companies
    01.20 / 21:05 argusleader.com
    Unions representing more than half of Sioux Falls city employees say their members aren't being paid what they…
  17. Our Populism-Infused Week-in-Review With Trump, Brexit and More

    Agmetalminer.com - Companies
    01.20 / 20:08 agmetalminer.com
    This week, the reality of a hard Brexit sunk in across the pond in the U.K. and Europe. The instability that might follow after elections in other European countries in the coming months could create volatility in all commodities markets, not just metals. Click Here for Current Metal Prices Here in the U.S., President Donald J. Trump was inaugurated today and promised "America first" in all the dealings of his new administration. In metals, this means that tariffs of 251% were confirmed on…
  18. Where to focus your IT budget in 2017

    Business.nvcoc.com - Companies
    01.20 / 18:14 business.nvcoc.com
    Where to focus your IT budget in 2017 Uncertain times call for wise planning in IT. Global political uncertainty and flat company revenues mean budgets will be stalled for the near future, affecting investment in not just products but people. It sounds dire; however, four clear themes remain relevant in governing IT budget spend for 2017. Hardware and software Research from Spiceworks, a network of IT professionals, suggests the bulk of financial allotment for the year…
  19. Why are all these famous chefs coming to L.A.?

    01.20 / 17:02 latimes.com
    (Robert Carter / For the Times) Everyone is moving to L.A. It's a sentence you might be tired of hearing, but it appears to be true for a certain subset of the nation's culinary elite. This year, an impressive group of celebrated chefs and restaurateurs from New York, San Francisco, Chicago …
  20. Delivery of first yacht in new Numarine line set for June

    Tradeonlytoday.com - Companies
    01.20 / 16:35 tradeonlytoday.com
    Construction of the Numarine 32XP, the first unit of the Turkish shipyard’s new XP explorer vessels line, is underway with the fit-out of the steel hull and GRP superstructure. Delivery is planned for June. The Numarine 32XP Explorer, a three-deck, 106-foot long, 26-foot beam superyacht, was ordered by an experienced Numarine owner who was s…