Tobacco Documents Online

`'`fHE WALL STREET JOURNAL, Wednesday, August 28, 1968 American Tobacco Gets Control of Gallaher In Offer to Holders Philip Morris Given Go-Ahead By British Agency on Proposal To Acquire Godfrey Phillips A w1LL STALIDT JOIIRNLI. NISOS $OtufdltP American Tobacco Co. succeeded in acqtlir- ing controlling interest In Gallaher Ltd., Great Britain's second-largest cigaret company, for an additional outlay of $115 million. Also yesterday, Philip Morris Inc. received clearance from the British Board of Trade to proceed with its acquisition of Godfrey Phillips Ltd., a considerably smaller British tobacco concern. Announcement of American Tobacco's cash offer results was made by Morgan Grenfell , Ltd., London merchant bankers, which said that a total of 43 million Gallaher shares had been received. Together with the 9.5 million shares that American owned initialiy and 12.2 million addi- tional shares that it purchased on the open market, the U.S. cigaret company received 88% of Gallaher's 73,858,000 common shares outstanding, But under terms of the offer, American will pare the number of additional shares received to 27,325,000, bringing its holdings to 87% of Gal]l3her. At ;4,20 a share, American will pay $115 million for the new shares. American had asked for 27,325,000 shares when its holdings amounted to only 9.5 million shares, or 12.9%0 of the stock outstanding, to bring its holdings to at least 50%a of Gallaher. American will purchase only 83% of the shares received from each Gallaher holder and Ireturn the remainder, according to Morgan Grenfell. Philip Morris, the fourth largest U,S. tobac• co company, originally made a bid to acquire 5070 of Gallaher at $3 a share, but American,, which already owned 12.9% of the stock, made its counter offer of $4.20 a share and Philip I Morris withdrew. Philip Morris last week, however, said It had agreed to buy all but 2,000 of the 841,625 24-cent-par-value common shares of Godfrey Phillips. Last' Friday, it made a formel offer to acquire all of the British company's 1,495;827 52.40-par-value common shares, which would brihg its holdings to 99.92% of the company's common shares outstanding at a price of $27.5 million. Philip Morris said it has "no present plans" to make an offer for Godfrey Phillips 850,000 $2:40:par value preference shares. Yesterday, the British Board of Trade said It won't refer the proposed acquisition to the Monopolies Commission, thus clearing the way for the merger. The board had previously passed favorably on American's Gallaher, bid. The Board determines whether mergers and take-over bids violate Britain's Monopolies and Mergers Act or are otherwise ag8lnst'the public interest. (12) /'L~C i Lorillard Sales Rise, Earnings Off Lorillard Corp. has reported second quarter earnings of $7,353,076, or $1.14 available per common share, compared with $8,252,044, or $1.24, for the same period last year. Consolidated net sales for the quarter rose to a record $149.- 263,149, compared with $146;492,040 in the second quarter of 1967, the previous record: Net income for the first half totaled $14,090,283, equal to $2.15 available per common share, against $14,411,855, or $2.16, in the first half of last year. Consolidated net sales for the period also were the highest for any six months end- ing June 30 in Lorillard's history, amount- ing.to $286,918,756, compared with the previous record $277,485,819 in 1967, an increase of 3'.4 per cent. The company said profit figures for the first half were at record levels before provision for the federal income tax surcharge of approximately 20¢ per common share. It also was stated that sales last year in the second quarter reflected unusual forward buying, before a cigarette price increase became effect- ive early in June. Reynolds Reports New , Sales, Earnings Gains R. J. Reynolds Tobacco Co., achieved record sales and earnings in the three and six months ended June 30, accord- ing to the report issued by A. H. Gallo- way, president and chief executive of- ficer. Second-quarter consolidated net earnings of Reynolds were $36,424,000 or 90 cents a common share, against $35,830,000 or 89 cents a share a year ago. Sales increased to $495,319,000 from $484,201,000, lifting the half-year volume to $961,445;000, from $929,- 792,000 in the first six months of 1967. Consolidated' net earnings for the first half improved to $69,045,000, or $1.71 a share, from $67,668,000, or $1.68 a share, a year earlier. I Tobacco Distributor & CoMectionery Guide August 1968 American Has Sales High, Profit Dip The American Tobacco Company pro- fits in the second quarter and first half of this year were somewhat lower than last year, reflecting the 10 per centt tax sur- charge and the 25-day strike at the com- pany's tobacco factories last January, the company reported, although sales were the highest in the company's history in both periods. . Second quarter net income was re- ported at $22,549,000, against~ $23,515,- 000 a year agao, both equal to 83 cents a common share. Sales rose to $382,852,- 000 from $380,419,000. For the six months, net income came to $.40;567,000, or $1.47' a common share, from $40,629,000, or $1.43 a share, in the 11967 first half. The per- share earnings were up because there was an average of 27,534,968 common shares outstanding this year andl 28,405,- 650 last year. Sales were $734,372,000, up from, $730.2-million, .•. SOW ~ ~ ~ ~ Q -~