Rothmans Board Recommends Shareholders Accept C$30.00 Per Share All Cash
TORONTO, July 31 /CNW/ - 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
The transaction values Rothmans Inc. at approximately C$2 billion. The
all-cash Offer represents a premium of approximately 16.9% over the 20-day
volume weighted average trading price for Rothmans Inc. shares on the Toronto
Stock Exchange through July 30, 2008. The Board of Directors of Rothmans Inc.
has, based on the recommendation of a special committee of independent
directors and upon consultation with its financial and legal advisors,
determined that the Offer is fair from a financial point of view to Rothmans
Inc. shareholders and is in the best interests of Rothmans Inc. and recommends
that Rothmans Inc. shareholders accept the Offer and tender their shares to
the Offer. Rothmans Inc. has received an opinion from its financial advisor
BMO Capital Markets that, subject to the assumptions and limitations stated in
such opinion, the consideration of C$30.00 per share offered under the Offer
is fair, from a financial point of view, to Rothmans Inc. shareholders.
PMI's agreement to make the Offer was conditional on Rothmans, Benson &
Hedges Inc. ("RBH") and Rothmans Inc. reaching an agreement, announced today,
with the Government of Canada and the governments of all ten provinces that
resolves the RCMP's investigation relating to sales of products exported from
Canada by RBH during the period 1989 - 1996. Rothmans Inc. holds a 60%
interest in RBH, while PMI holds the remaining 40% interest in RBH. Details of
the settlement are contained in a separate press release issued by Rothmans
Inc. concurrently with this release.
Full details of the Offer will be included in the formal offer and
take-over bid circular that is expected to be mailed to Rothmans Inc.
shareholders by August 10, 2008. PMI's take-over bid circular will be
accompanied by a Rothmans Inc. directors' circular, which will provide
shareholders of Rothmans Inc. with, among other things, the reasons for the
recommendation of the Rothmans Inc. Board of Directors that Rothmans Inc.
shareholders accept the Offer. PMI's obligation to acquire shares pursuant to
the Offer is subject to certain conditions including: (i) the valid deposit of
at least 66-2/3% of the outstanding Rothmans Inc. shares (on a fully-diluted
basis); (ii) receipt of Competition Act and Investment Canada approvals; and
(iii) the non-occurrence of a material adverse effect. If these conditions are
met, PMI will enter into a second-step transaction pursuant to which each
Rothmans Inc. share that was not tendered to the Offer will be converted into
the right to receive C$30.00 in cash. Upon completion of the second-step
transaction Rothmans Inc. will become a wholly owned indirect subsidiary of
PMI. Completion of both transactions is expected by the end of October, 2008.
Under the terms of the support agreement, Rothmans Inc. will pay a
termination fee of C$40.9 million to PMI if the support agreement is
terminated by PMI due to a superior proposal from a third party. PMI will pay
a termination fee of C$81.7 million to Rothmans Inc. if the Offer is not made
Under the terms of the support agreement, the Board of Directors of
Rothmans Inc. has agreed to suspend the regular quarterly dividend for the
second quarter of fiscal 2009, which has historically been paid in September.
The above is a brief summary of the Offer. This summary is qualified in its
entirety by reference to the definitive support agreement, a copy of which is
available on SEDAR at www.sedar.com and on the Rothmans Inc. website at
Forward Looking Statements
Certain statements contained in this release constitute "forward-looking
statements" and express views as to future events, circumstances and trends
relating to the business of RBH and Rothmans Inc. Words such as "plans,"
"intends," "outlook," "expects," "anticipates," "estimates," "believes,"
"should" and similar expressions may identify forward-looking statements.
Forward-looking statements are based on management's current expectations and
assumptions and entail various risks and uncertainties. There is no assurance
that any forward-looking statement will materialize. Actual results may differ
materially from these expectations and forward-looking statements, if known
and unknown risks or uncertainties affect RBH's business or Rothmans Inc., or
if management's expectations or assumptions prove to be inaccurate. Factors
that could cause actual results to differ materially from the forward-looking
statements contained herein include, but are not limited to: Rothmans Inc. and
PMI finalizing their respective circulars on schedule; the ability of Rothmans
Inc. and PMI to satisfy or complete the conditions of the Offer as required by
the support agreement; the availability of regulatory approvals required for
completion of the Offer; Rothmans Inc. and PMI's abilities to complete a
second-step transaction; and Rothmans Inc. and PMI's abilities to fund the
payment of any required termination fees. Rothmans Inc. disclaims any
obligation or intention to update or revise any forward-looking statement,
whether the result of new information, future events or otherwise, except as
otherwise required by applicable law. Additional information concerning risks
and uncertainties affecting Rothmans Inc. and RBH is contained in the
Company's filings with the Canadian securities regulatory authorities,
including the Company's Annual Information Form (in particular under "Legal
Proceedings" and "Risk Factors") available on SEDAR at www.sedar.com or on the
Company's website at www.rothmansinc.ca.
For further information:
For further information: Barry Joslin, (416) 442-3634