Rothmans gets takeover offer from Philip Morris
Last Updated: Thursday, July 31, 2008 | 4:28 PM ET
CBC News
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Rothmans Inc., Canada's only publicly-traded cigarette company, agreed Thursday to a friendly takeover offer from tobacco giant Philip Morris International Inc. that values that Canadian company at $2 billion.
PMI is offering $30 a share in cash for Toronto-based Rothmans.
A condition of the offer was that Rothmans settle tobacco-smuggling charges in Canada. That settlement with the governments of Canada and the ten provinces was also announced Thursday.
The offer includes a 16.9 per cent premium to the recent trading range for the shares of Rothmans.Rothmans 3-month TSX chart
Investors responded by sending shares of Rothmans up $3.53, or more than 13 per cent, to $29.70 on the TSX.
The board of directors of Rothmans is backing the deal, and Rothmans has agreed to pay a $40.9-million break-up fee to PMI if Rothmans chooses to go with a better offer from another company. PMI will pay Rothmans an $81.7-million termination fee if the deal is not completed.
Rothmans owns 60 per cent of Rothmans, Benson & Hedges Inc. The remaining 40 per cent of RBH is owned by an affiliate of PMI.
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