Lorillard Sends Employees Memo about Proposed Sale to Reynolds American

Source from:  Winston-Salem (NC) Journal  09/15/2015

Lorillard Tobacco Co. has made its initial communication to its 2,900 employees about what to expect if federal regulators approve Reynolds American Inc.'s $27.4 billion purchase of the company.

The complicated deal, which involves two U.S. and two British tobacco manufacturers, was announced July 15.

Reynolds would acquire Newport, the No. 2 cigarette in the United States, in the deal.

Reynolds plans to sell the rest of Lorillard's operations to Imperial Tobacco Group PLC for $7.1 billion. Imperial would absorb the bulk of Lorillard's employees, mostly working in Greensboro and Danville, Va.

Company officials and industry analysts say it could take six to nine months for the Federal Trade Commission to make a ruling. Susan Cameron, Reynolds' chief executive and president, said she expects few public disclosures on the decision-making process by the FTC and the companies. Both Cameron and Murray Kessler, Lorillard's top executive, have expressed confidence that the deal will be approved.

William Crump, a Lorillard senior vice president for human resources, said in an employee memo (also submitted as a regulatory filing) that everyone needs "to be mindful of the complexity of this agreement." He stressed Lorillard can't officially speak on behalf of Reynolds and Imperial in terms of employment and benefit policies.

Crump said Lorillard employees would be notified no less than 30 days from a confirmed closing date on the Reynolds purchase if they are to become a Reynolds employee or receive a job offer from Imperial.

Both companies have agreed to provide "comparable pay and active employee benefits" for one year upon the proposed deal being completed. Employees' work time at Lorillard would be credited by both companies in terms of benefits.

No one who goes to work for Reynolds would be eligible for a severance package.

They would not be eligible for a severance package if they are offered a comparable job position by Imperial "regardless if whether you accept or decline the offer." Crump defined a comparable position as one with similar responsibilities and comparable compensation and active employee benefits at a geographic location within 50 miles of their current workplace. Imperial has its main U.S. production facility in Reidsville.

The severance package of base salary would run from a minimum of eight weeks up to 52 weeks for those with at least 22 years of service. The package can be paid out in a lump sum or in installments.

Employees will not be allowed to retire from Lorillard and collect a Lorillard pension while working for Reynolds, but they will be able to do that as an Imperial employee. Reynolds would become responsible for Lorillard's pension plan for current and future retirees.

For Lorillard's union production workers, collective bargaining agreements will remain in effect through the closing date. "Imperial has committed to assuming the existing collective bargaining agreements," Crump said.

Imperial will be responsible for any current or future retirees under the hourly pension plan. Enditem