Create a free account to continue

Philip Morris To Acquire Rothmans

Cigarette maker announced Thursday that it is buying Canada-based Rothmans for about $1.95 billion.

NEW YORK (AP) -- Philip Morris International Inc. announced Thursday that it is buying Canadian cigarette maker Rothmans for about $1.95 billion.

Philip Morris International said it will launch a public tender offer to buy all the shares of Rothmans for $29.28 (30 Canadian dollars) each. The price is a 17 percent premium to Rothmans' 20-day volume-weighted average trading price on the Toronto Stock Exchange.

Philip Morris International, which sells Marlboros outside the U.S., says the deal is worth about $1.95 billion (C$2 billion).

Canada-based Rothmans makes and sells cigarettes including Benson & Hedges, Craven A and Mark Ten. Rothmans now owns a 60 percent interest in Rothmans, Benson & Hedges Inc. The remaining 40 percent is owned by Philip Morris International.

The deal is expected to be completed by Sept. 30.

Rothmans Benson & Hedges was fined 100 million Canadian dollars ($97 million) after pleading guilty to customs charges related to contraband cigarettes and smuggling, the Royal Canadian Mounted Police said Thursday. Imperial Tobacco Canada Limited was fined 200 million Canadian dollars ($195 million).

The charges involved the shipment of contraband tobacco in Canada to locations in the United States and near the Canada-U.S. border between 1989 and 1994. From there, it was distributed to smugglers or black market distributors who brought it back into Canada for further illegal distribution.

"RBH and Rothmans Inc. have agreed to this overall resolution in order to bring closure to this legal matter and to put an end to the uncertainty and burden on the companies arising from the RCMP's investigation," the company said in a statement.

Philip Morris International Inc., which was spun off from Altria Group Inc. on March 28, also sells the L&M, Bond Street, Chesterfield and Lark brands.

The company said last week that its earnings rose 23 percent in the second quarter, and raised its earnings forecast for this fiscal year, saying its growth has not been hurt by the inflationary pressures affecting many other consumer products companies.