BIDDING WAR CONTINUES FOR SANTA FE TOBACCO

RJR Offers $340 Million for American Spirit Marketer

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CHICAGO (AdAge.com) -- The bidding war for Santa Fe Natural Tobacco Co. continues, as R.J. Reynolds Tobacco Holdings on Monday filed its second counterbid in two weeks to trump offers from Toronto-based Rothmans.

RJR upped

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its Nov. 22 offer of $320 million in cash to $340 million to purchase the privately held marketer of additive-free niche cigarette brand Native American Spirit.

RJR's two offers came in response to Rothmans' September bid of $275 million in cash and stock, and its increased offer last week of $353.7 million in cash, stock and debt. Rothmans has until Dec. 10 to file a third bid.

The board of Santa Fe, which recorded net income of $20.5 million on $78.8 million in net sales last year, is evaluating RJR's most recent offer. If it accepts the offer, the company will be obligated to pay Rothmans $11 million to terminate its earlier merger agreement, according to a Rothmans statement.

Santa Fe would not comment on the deal.

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