Reynolds, BAT file dismissal requests on lawsuit

Reynolds, BAT file dismissal requests on lawsuit

Reynolds American Inc. and British American Tobacco PLC have filed separate requests for the N.C. Business Court to dismiss a lawsuit trying to block Reynolds’ $27.4 billion offer for Lorillard Inc.

Their requests were filed this week, along with a request to stay discovery pending a ruling.

The Beatrice Corwin Living Irrevocable Trust is suing Reynolds, its board — which includes top executive Susan Cameron — and BAT for breach of fiduciary duty in the deal announced July 15. It says that BAT is protecting its 42 percent stake in Reynolds at the expense of public shareholders.

The complaint also cited Lorillard shareholders gaining a 15 percent stake in Reynolds, which reduces the public shareholders’ holdings to 43 percent — just above BAT’s stake.

The lawsuit was filed Aug. 8 in Guilford County Superior Court and was moved Aug. 12 to the N.C. Business Court. The plaintiff wants class-action status and a jury trial.

The trust filed an amended complaint Nov. 7 following the Oct. 20 joint proxy filing by Reynolds and Lorillard.
Proxy filings contain shareholder information about proposed mergers and acquisitions. In large deals, the filings typically provide a narrative of how the proposed deal came together.

The Federal Trade Commission is expected to take six to nine months to conduct the review for antitrust concerns. The companies are projecting the completion of the deal in the first half of 2015.

BAT said in its response that the trust lacks standing to make its claims, foremost that BAT is a controlling shareholder over Reynolds. BAT said that because it is not a controlling shareholder and a contractual limitation (five board representatives out of 12) limits its influence on the Reynolds’ board, “it does not owe a fiduciary duty to other shareholders.”

In its response, Reynolds said “it is well settled under N.C. law that a corporation’s directors owe fiduciary duties only to the corporation, and not to the corporation’s shareholders.”

“Corwin’s claims against Reynolds for aiding and abetting the director defendants’ alleged breaches of fiduciary duties are not one that has been recognized by the N.C. Supreme Court.”

Source: http://www.journalnow.com/business/business_news/local/reynolds-bat-file-dismissal-requests-on-lawsuit/article_861d1a94-8092-11e4-90ad-8b485ff788fb.html