British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Merger or Acquisition (January 2017)
17 slides from British American Tobacco P.l.c's merger presentation, January 2017
Slide 1: British American Tobacco p.l.c. Proposed Acquisition of Reynolds American Inc.
British American Tobacco p.l.c. Proposed Acquisition of Reynolds American Inc. January 2017
Slide 2: Important notice
Important notice This presentation in relation to British American Tobacco p.l.c. (“BAT”) and its subsidiaries (collectively, the “BAT Group”) and Reynolds American Inc. (“Reynolds”) and its subsidiaries (collectively, the “Reynolds Group”, and together with the BAT Group, the “Group”) has been prep
Slide 3: Important notice: Additional information and where to find it
Important notice Additional information and where to find it This communication is neither a solicitation of a proxy nor a substitute for any proxy statement or other filings that may be made with the SEC in connection with the Proposed Transaction. Any solicitation will only be made through materia
Slide 4: Compelling strategic rationale
Compelling strategic rationale Creates a stronger, truly global tobacco and Next Generation Products (NGP) company Direct access to the attractive US market Strategic Rationale A balanced presence in high growth emerging markets and high profitability developed markets Portfolio of strong, g
Slide 5: Compelling financial rationale
Compelling financial rationale At least $400m annualised cost synergies anticipated by the end of year 3 EPS and DPS accretive in first full year, targeting mid-single digit EPS accretion in year 3 Beats the Group WACC for the US by year 5 Financial Rationale Strong financial profile with co
Slide 6: Transaction highlights
Transaction highlights Reynolds shareholders will receive US$29.44 in cash and 0.526x BAT shares per Reynolds share – Values each Reynolds share at $59.64* Key offer terms – Represents a premium of 26% to the Reynolds closing price on 20 October 2016* – Values 57.8% of Reynolds not already owned b
Slide 7: Transaction highlights: timing and closing
Transaction highlights Transaction is recommended by the Transaction Committee of Reynolds and the Boards of both companies Timing and Subject to approval of Reynolds and BAT shareholders, certain customary closing conditions closing including regulatory approvals Transaction expected to close
Slide 8: Timeline
Timeline SEC process BAT p.l.c. intends to be registered under the US securities laws as part of the transaction. expected to take 4 to 5 New BAT shares will be issued to Reynolds shareholders in the form of NYSE-listed Level III ADRs as months part of the deal consideration. The merger consti
Slide 9: BAT - A proven track record of growth…
BAT - A proven track record of growth… 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 10% 9% 0% 5% 0% 15% 11% 12% 10% 10% 9% 10% 10% 10% 8% -4% -5% -4% -12% -10% At constant rates FX translational impact 10% average EPS growth at constant currency Source: Company’s financial results as published
Slide 10: ... and returns
... and returns 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 148.1 154.0 142.4 134.9 126.5 114.2 99.5 83.7 66.2 55.9 Dividend per share 12% CAGR DPS growth Source: Company’s financial results as published Confidential
Slide 11: Highly attractive US market
Highly attractive US market One of the biggest tobacco markets by volume… …and largest open market by value… Bn sticks 2015 Value $bn 2015 US CAGR 2015 – 20E: (2.1)% 228 US CAGR 2015 – 20E: 1.8% 2,490 94 303 269 264 182 32 103 97 88 23 23 20 83 81 20 17 17 16 Turkey Germany Italy France Japan Indone
Slide 12: A unique geographic footprint
A unique geographic footprint BAT BAT Post-Transaction Volume split EM DM EM DM US Equivalent Net Revenue/Pack Net Revenue CAGR (2010-2015) Developing 13 packs +8% USA 2 packs +5% Developed 6 packs +4% Group (T40) 10 packs 5% Greater proportion of Group volume will come from high growth markets Sour
Slide 13: Combined business will have unique portfolio of strong brands…
Combined business will have unique portfolio of strong brands… BAT +510 bps 2016 vs. 2010 GDB share 2.4% 2.3% 1.5% 3.3% 2.2% RAI Operating Companies +650 bps 2016 vs. 2010 Key brand share No. 2 in US No. 3 in US Fastest growing No. 1 value Leading moist No. 1 menthol No. 3 menthol premium brand bran
Slide 14: To drive continued strong corporate share growth…
To drive continued strong corporate share growth… Key Brand Share +90bps 600 +80bps 700 GDB +120bps Share +40bps 500 600 +90bps +90bps 500 +150bps 400 +90bps +50bps 400 BAT +70bps 300 +240bps Share +40bps +20bps 300 +30bps RAI +80bps Operating +40bps +80bps 200 Companies’ +40bps +110bps Share* 200 +
Slide 15: World class Next Generation Products
World class Next Generation Products Opportunity to create truly global leading NGP brands BAT RAI* Tobacco heating Closed vapour Open vapour Hybrid products systems systems Significant presence in the largest NGP markets RAI* BAT 44% 60% 35% 9% 5% 2% n/a Market shares based on Nielsen data where av
Slide 16: Compelling strategic and financial rationale
Compelling strategic and financial rationale Creates a stronger, truly global tobacco and Next Generation Products (NGP) company Direct access to the attractive US market Strategic A balanced presence in high growth emerging markets and high profitability developed markets Rationale Portfoli
Slide 17: British American Tobacco p.l.c. Proposed Acquisition of Reynolds American Inc.
British American Tobacco p.l.c. Proposed Acquisition of Reynolds American Inc. January 2017
British American Tobacco p.l.c. — Merger or Acquisition (January 2017) on 6ix