What Happens If Reynolds American Changes Owners?

This week, the Winston-Salem Journal published a story outlining the possibility that one of the city's signature companies could be picked up by an overseas competitor.

In the piece, a financial analyst says it's “very possible” that British American Tobacco will buy a majority stake in Reynolds American, Inc.

Or it could simply buy Reynolds outright.

While British American already owns a significant stake in the company, it has been banned from buying more stock until recently.

WFDD's Sean Bueter talked to Journal reporter Richard Craver about the Reynolds rumors.

He says – if the deal goes ahead – there could be a lot of money on the table.

Interview Highlights

On why British American Tobacco might be interested in buying Reynolds now:

“If someone's willing to offer you $50-$60 billion for your company, that's an awful lot of money to turn down…As much as the adult and teenage smoking levels in the United States have continued to go down, it's still a very viable market in terms of pricing, in terms of what you can make here. So from that perspective, it would make sense – if BAT truly believes there's a consolidating global industry – to consolidate, and then also enter the U.S. market formally again.”

On how an RAI acquisition could affect Winston-Salem:

“You would think – given that BAT has no real presence in this country – that this would be a fairly neutral transaction for Winston-Salem and Reynolds. Reynolds has somewhere around 2,000-2,300 employees of its 5,900 employees still here. So I would think, in a best case scenario, that BAT would just let Reynolds continue to run as it does…”

On why this story is important:

“You know, a lot of our community identity and our economy is still tied into the tobacco industry, even though it's not grown as much here as it used to be. We have so much legacy tied up in the tobacco industry, it would just be sort of a jolt to our socioeconomic system, even though at the time it might happen, it might make a lot of sense.”

You can read Richard Craver's story on the potential for a Reynolds sale on the Winston-Salem Journal's website.