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BRIEF-Imperial Tobacco says to buy some Reynolds American assets for $7.1 bln
July 15, 2014 / 11:26 AM / 3 years ago

BRIEF-Imperial Tobacco says to buy some Reynolds American assets for $7.1 bln

July 15 (Reuters) - Imperial Tobacco Group Plc :

* Subsidiary of Imperial Tobacco Group Plc has entered into a purchase agreement with Reynolds American Inc

* Assets are to be acquired for a consideration of $7.1 billion (£4.2 bln) following proposed acquisition of Lorillard by Reynolds

* After adjusting for present value of expected tax benefits of about $1.5 billion, net acquisition cost of $5.6 billion(£3.3 bln) implies a multiple of 6.9 times EBITDA

* Enlarged US business will be about 24 pct of combined tobacco net revenues

* Deal expected to be significantly EPS enhancing in first full year post completion

* Cigarette brands will be acquired excluding historic product liabilities which are subject to an indemnity from Reynolds

* Deal is expected to offer a return of over 10 pct, well in excess of Imperial’s cost of capital in its first full year

* Imperial’s intention to increase dividends by at least 10 pct for financial year 2014 is unchanged

* Consideration will be met in cash from new committed bank facilities already put in place

* May consider options to refinance all or a portion of these facilities ahead of closing of transaction

* Main bank facility has been renegotiated on attractive terms, with a new five year term until 2019 Source text for Eikon: Further company coverage:

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