Japan Tobacco to Pay $450 Million for Sudan Cigarette Maker

Japan Tobacco Inc. agreed to pay $450 million for a cigarette maker operating in Sudan and oil- rich South Sudan, which gained independence this month after a rebellion that lasted almost 50 years.

Haggar Cigarette & Tobacco Factory Ltd. controls 80 percent of the market in Sudan and is "well established" in the Republic of South Sudan, the Japanese company said. The deal values the maker of Bringi cigarettes at 9.9 times last year's underlying earnings before interest, tax, depreciation and amortization, Japan Tobacco said in a statement yesterday.

Japan Tobacco, the world's third-largest publicly traded cigarette maker, plans to boost overseas profit by at least 10 percent as an aging population and a higher cigarette tax weaken demand at home. Net income may expand 11 percent to 161 billion yen ($2.1 billion) this fiscal year on increased prices in Russia and other markets abroad, the Tokyo-based maker of Mild Seven, Camel and LD cigarettes said yesterday.

"This acquisition is positive because it shows the company is eager to grow overseas," said Mikihiko Yamato, a Tokyo-based analyst at Japan Invest KK. "The company prefers making acquisitions in Asia, but it is difficult to find candidates in the region."

Japan Tobacco gained 3.7 percent in Tokyo trading to close at 350,000 yen, the highest level since Feb. 17. The stock has gained 16 percent this year, compared with a 6.4 percent drop in the broader Topix index.

Court Smokes Out Tobacco Company for Cartoon Ads

R.J. Reynolds Tobacco violated a ban on the use of cartoon advertising with its 4-page spread in the 40th anniversary issue of Rolling Stone, an Illinois appeals court ruled.
According to a 1998 settlement agreement, Reynolds is no longer allowed to use cartoons in its advertisements, as it did for many years in the promotion of its Camel cigarettes.
In 2006, Reynolds unveiled its "Camel Farm" promotion, a partnership with independent record companies.
"The Farm Free Range Music" was the title of the four-page ad in the Nov. 14, 2007, issue of Rolling Stone. It included images of a flying radio and speakers growing like flowers out of the ground.
Illinois protested in court that Reynolds' ads in Rolling Stone, its website and a live concert violated the cartoon ban.
The state also complained that Reynolds should have told Rolling Stone not to use cartoons in a five-page editorial section on independent music, right beside the Camel Farm ad.
Though the trial court ruled in favor of Reynolds, stating that the ads did not portray the powers of a superhero, Illinois prevailed in the Chicago-based First District Illinois Court of Appeals.
"An eagle flying with a hand protruding from a picture frame clutched in the eagle's claws is 'unnatural' because it varies from what is normal or expected," Judge David Sterba wrote for the court.
"Moreover, the images of radios, speakers and a television, which have a unifying trait of emitting sound, are also 'unnatural,'" he added. "In the advertisement, radios, speakers and a television are each placed on a plant stem to resemble flowers and to be representatives of seedlings rising from the underground."
The court also ruled, however, that the images on the website and the concert did not violate the cartoon ban.
While the case must return to court for a determination of attorneys' fees, Reynolds will not have to pay a $6.5 million sanction, which Sterba wrote was properly denied by the trial court.

Illegal tobacco seized in ATO raids

The seizures come as the tobacco industry warns the Government's plain packaging laws and high excise taxes will lead to a growth in the black market - a claim rejected by public health experts.

Australia's commercial tobacco-growing industry shut down in 2006, but Australian Tax Office deputy commissioner Michael Cranston says there are a few people in Sydney's west who appear intent on growing their own and selling it.

"There was an estimated amount of up to 20 tonnes seized today by the Australian Taxation Office from 12 greenhouses in Western Sydney," he said.

"Twenty tonnes would have an estimated excise value of about $5 million."

The ATO has conducted six similar raids since the industry was shut down, and Mr Cranston says it is an ongoing concern.

"We work with the community in relation to obtaining intelligence, we work very closely with law enforcement," he said.

"Today's seizure was a result of finding a particular truck that had tobacco and the operation then led us to these greenhouses.

"Other times we actually conduct aerial surveillance on properties of high risk to also look for illegally-grown tobacco."

Andrew Card elected to Lorillard board

Cigarette maker Lorillard says former White House chief of staff Andrew Card is joining the company's board of directors.

The nation's third-biggest tobacco company announced Card's election to the board on Thursday.

Card said he's eager to play a role in helping the maker of Newport and Maverick brand cigarettes responsibly achieve its long-term objectives.

CEO Murray Kessler said Card's experience in government and industry will further strengthen the Greensboro, N.C.-based company's board.

Card served President George W. Bush as chief of staff and his father, President George H.W. Bush, as deputy chief of staff and as transportation secretary. He also worked in the Reagan administration.

With the addition of Card, Lorillard's board is comprised of nine members, eight of whom are non-executive independent directors.

Canada's top court to rule on tobacco liability

Canada's Supreme Court will decide on Friday whether the federal government should be partly liable for damages, possibly amounting to many billions of dollars, stemming from lawsuits against tobacco firms.

The tobacco industry -- facing suits from several provinces seeking to recoup healthcare costs -- says that, if it loses, the government should pay at least part of the damages because Ottawa allowed and regulated the use of tobacco.

The court is scheduled to deliver its ruling at 9:45 Eastern (1345 GMT).

Ottawa is fighting a decision by an appeals court in the province of British Columbia, which ruled in 2009 that the federal government should be a co-defendant and therefore share in any liability awarded by the province's courts.

British Columbia is suing R.J. Reynolds Tobacco Co (RAI.N), Japan Tobacco's (2914.T) JTI-Macdonald unit, Rothmans Benson & Hedges Inc, which is partly owned by Philip Morris (PM.N), and Imperial Tobacco Canada Ltd, a unit of British American Tobacco (BATS.L).

Several of Canada's 10 provinces have sued or say they will sue the tobacco industry but British Columbia filed first and Canadian courts are using it as the lead case.

British Columbia declined to say how much money it was seeking in damages. Ontario, Canada's most populous province, launched a suit against the companies in 2009 seeking C$50 billion ($53 billion).

The Supreme Court will also rule in a separate but similar case in which Imperial Tobacco wants Ottawa to be liable for any damages awarded against it in suits alleging the company wrongly marketed some tobacco products as "mild" or "light".

Now, drug from tobacco plant to help fight HIV

UK regulators have approved the first clinical trial of specially designed antibodies that stop the virus passing from person to person.

At the University of Surrey Clinical Research Centre, eleven women will be treated with the topical treatment, which has been created from genetically modified tobacco plants.

It is believed that the antibodies will reduce the risk of treated women from catching the disease.

"This is a red letter day for the field," the Daily Mail quoted project researcher Professor Julian Ma, at St George's, University of London, as saying.

"The approval from the MHRA (Medicines and Healthcare products Regulatory Agency) for us to proceed with human trials is an acknowledgement that monoclonal antibodies can be made in plants to the same quality as those made using existing conventional production systems.That is something many people did not believe could be achieved," he added.

The genetically modified tobacco plants producing antibody called P2G12 were grown in containment greenhouses at the Fraunhofer Institute in Aachen, Germany.

Commissioner concerned over tobacco money

Cleburne County Commissioner Emmett Owen said in an interview Tuesday morning that he is concerned about how tobacco tax money is being used in the county.

Owen told The Cleburne News that since its’ inception some $600-$700,000 has been collected, all of which has been used on road projects including maintenance and resurfacing.

As he sees it, the money should be going to economic development and expansion of parks and recreational programs. “I am not against the money being spent, I am just against what it is being used for,” he said.

According to Section 45-15-243.04 of the bill establishing the tobacco tax, the funds “shall be distributed to the Cleburne County General Fund to be expended for the purposes of economic development, the development of parks and other recreational programs and facilities, and for the promulgation of public health programs and facilities.”

“No where in that do I see where we need to be maintaining or resurfacing roads with that money,” Owen said.

He apparently is not the first to be concerned because the Attorney General was asked for an opinion in May 2009 “Does the provision in Section 5 of Act 2003-323 authorizing the county commission to expend the proceeds of an additional tobacco tax for economic development, among other things, authorize the county commission to expend the funds for transportation infrastructure, maintenance, and improvement?

And a second question asked, “Assuming the answer to Question 1 is yes, if the county commission opts to expend proceeds of the tobacco tax for transportation infrastructure, maintenance, and development, must the county commission identify a specific, delineated, economically sensitive development purpose for expending the funds, or may the county commission treat general transportation infrastructure, maintenance, and improvement as economic development use because such transportation infrastructure, maintenance, and improvement serves as a primary stimulus for all economic development?”

The Attorney General, Troy King at that time, responded by saying that in his opinion the act “does not specifically authorize the county commission to use the tobacco tax funds for transportation, infrastructure, maintenance, and improvement in the county” and “the term ‘economic development’ is not defined in the act, and there is no general definition of the term found in the Code of Alabama, Thus, the term must be given its commonly accepted meaning. . . .This Office has recognized that an economic development project may include transportation infrastructure, maintenance and improvement.”

The AG further states that it is his opinion “that the term ‘economic development’ includes transportation infrastructure, maintenance, and improvement” and that use of such funds “must be related to economic development.”

The opinion further states, “the act requires the county commission to find that a particular expenditure for transportation infrastructure, maintenance, or improvement serves an economic development purpose” and the commission “must make a determination that the expenditure for a particular road will serve to enhance or stimulate economic development in a specified area.”

Owen said he opposed bringing up a resolution for adoption in Monday afternoon’s commission meeting because he feels the tobacco tax money should be distributed more equally among the districts and used for what he feels should be as set out in the original law and not for road maintenance.

The resolution needed full support of the commissioners to be considered and Owen opposed it.

The resolution stated, in part, that the county has “authorization due to an Attorney General’s Opinion to apply proceeds from the existing tobacco tax to economically sensitive county road infrastructure within the county”

Owen said anyone can get an AG opinion and he feels a final decision should be left up to a judge to rule on the issue. The resolution seeks to use $100,000 of the tobacco tax proceeds in FY 2011 to improve county roads 11, 49 and 65 due to their use by heavy trucks and equipment serving the timber, construction and agriculture industries hauling timber, baby chickens, poultry, hay, livestock feed, commercial nursery plants and a winery.

“As far as I know none of the tobacco tax money has ever been spent in Districts 1 and 2 and certainly not on any new projects,” Owen added.

Owen noted that the Cleburne County Chamber of Commerce hopes to get $10,000 next year from the commission. “That is really a small amount of money and they can’t even expect much out of us while all this money is being spent on road maintenance. I don’t think it is right,” he said.

Following the commission meeting Monday night, Owen said he attended a meeting of the chamber where he also voiced his concerns over how the money is being used.

Cleburne County Commission Ex-Officio Chairman Ryan Robertson said the matter could come up for a vote at a future commission meeting.

Read more: Cleburne News - Commissioner concerned over tobacco money.

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