Takeover Bid of Rothmans by Philip Morris for $2B

On July 31, 2008, Rothmans Inc. announced that it had entered into a support agreement with Philip Morris International Inc. (PMI) that provided for an offer to be made by PMI, by way of a takeover bid, to all Rothmans Inc. shareholders to purchase all of the outstanding common shares of Rothmans Inc. for $30 per share in cash. The transaction values Rothmans Inc. at approximately $2 billion.

The deal still must be accepted by Rothmans' shareholders and be cleared by Investment Canada. The Competition Bureau has already signed off on the deal. The announcement of the takeover deal came on the heels of a $550 million settlement by Rothmans with the Government of Canada and all 10 provinces. The settlement resolves the RCMP's investigation relating to products exported from Canada by Rothmans, Benson & Hedges Inc. from 1989 to 1996. Rothmans, Benson & Hedges Inc. is the Canadian operating company that is owned 60 per cent by Rothmans and 40 per cent by Philip Morris. Through this deal it will be wholly owned by Philip Morris.

Rothmans Inc. was represented by Gowling Lafleur Henderson LLP. The Gowlings team was led by Dean Blain and Kathleen Ritchie and included Kate Lioubar, Alex Lalka and Leslie Gord (corporate/securities), Bruce Graham, Ian Macdonald, Bob Milnes and Nicole Chen (competition/Investment Canada), Ash Gupta, Gloria Geddes and John Sorensen (tax), Dan Hayhurst (pensions) and Rhonda Jansen (employment), with additional support from Pierre Lissoir and Léonard Serafini.

Counsel to the special committee of the board of directors of Rothmans Inc. was Davies Ward Phillips & Vineberg LLP. The team was led by Bill Gula and included Peter Hong and Ivana Gotzeva.

Financial advisor to Rothmans Inc. was BMO Capital Markets.

Counsel to Philip Morris International Inc. was Wachtell, Lipton, Rosen & Katz LLP, with a team led by Andrew Nussbaum and David Karp, with Karessa Cain and James Cuneo (corporate/securities), David Kahan (employment), Caith Kushner and Ophir Nave (financial services). Heenan Blaikie LLP acted as Canadian counsel for Philip Morris International Inc., with a legal team led by Jeff Barnes that included Kevin Rooney, Charlie MacCready and Mike Hollinger (corporate/securities) and Subrata Bhattacharjee and Jon Smithen (competition/Investment Canada).

Financial advisor to Philip Morris International was JP Morgan.