Rothmans Board Recommends Shareholders Accept C$30.00 Per Share All Cash
Offer
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 Inc.
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 or completed.
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 www.rothmansinc.ca.
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.