Lorillard, Inc. to RAI

Tobacco/Jul 2014/Barclays, Centerview

Deal Information

Target

Lorillard, Inc.

Acquiror

RAI

Sector

Tobacco

Target Type

Public

Acquiror Type

Strategic

Advisors

Barclays, Centerview

Enterprise Value

$27.9B

EV / LTM Sales

EV / LTM EBITDA

13.8x

EV / Fwd EBITDA

Comparable transactions cited by the advisor, excluding the subject transaction.

EV/LTM EBITDA selected range: 11.0x - 12.5x

13 comps


Sep 2008	UST Inc.	Altria Group, Inc.	$11.7B	6.0x	12.0x	-
Jul 2008	Rothmans Inc.	Philip Morris International Inc.	$3.3B	5.0x	9.9x	-
Nov 2007	John Middleton, Inc. net of ~$700M PV tax benefits	Altria Group, Inc.	$2.2B	6.1x	12.1x	-
Feb 2007	Commonwealth Brands Inc. net of ~$400M PV tax benefits	Imperial Tobacco Group PLC	$1.5B	4.3x	8.6x	-
Apr 2006	Conwood LP	Reynolds American Inc.	$3.5B	7.7x	13.5x	-
Feb 2008	Skandinavisk Tobakskompagni (Cigarette & Snus)	BAT	$4.1B	4.5x	11.2x	-
Feb 2008	Tekel	BAT	$1.7B	3.3x	11.4x	-
Jul 2007	Altadis SA	Imperial Tobacco Group PLC	$22.5B	4.1x	14.0x	-
Dec 2006	Gallaher Group plc	Japan Tobacco Inc.	$19.1B	3.7x	13.3x	-
Mar 2005	Sampoerna	Philip Morris International Inc.	$5.1B	5.3x	13.9x	-
Jul 2003	Ente Tabacchi Italiani SpA	BAT	$2.7B	3.3x	11.8x	-
Mar 2002	Reemtsma Cigarettenfabrik GmbH	Imperial Tobacco Group PLC	$5.1B	2.5x	12.7x	-
Jun 2001	Austria Tabak	Gallaher Group plc	$1.9B	1.9x	8.5x	-
	Mean			4.4x	11.8x	-
	Median			4.3x	12.0x	-

Discount rate and terminal value assumptions the advisor selected for its discounted cash flow analysis.

Advisor	WACC	Terminal method	Terminal assumption	Forecast basis	Forecast period	Filing
Barclays	6.5% – 8.0%	Exit multiple	8.5x – 9.5x	Lorillard management projections	H2 2014E through FY2018E	Open