“Game changing” Vuse e-cigarette technology owned by Reynolds American (RAI) is a central issue in the class-action suit seeking to block the cigarette maker’s acquisition of Lorillard, court documents show.

“E-cigarettes—which are currently unregulated and untaxed in most states—are the future of the tobacco industry”, states an amendment to the class-action to the class-action suit filed by lawyers for Dr Robert Corwin, trustee for the Beatrice Corwin Living Irrevocable Trust in New York. However a technology sharing deal announced between RAI and British American Tobacco (BAT) concurrent with the Lorillard announcement on 15 July would amount to a technology transfer to BAT without adequate RAI shareholder compensation, the suit alleges.
Filed in August in Guilford Superior Court, North Carolina (TJI first reported the suit on 14 Aug), the case has been moved to North Carolina Business Court (14 CVS 8130). The suit alleges RAI is seeking to acquire Lorillard to make it a less attractive takeover target for BAT, which controls a 42 per cent stake in RAI.
“Timing of the proposed transaction is no coincidence”, states an amended complaint to the case filed 7 Nov. “The proposed transaction forestalls a takeover by making Reynolds a significantly less attractive takeover target for BAT. Most notably, BAT no longer needs to buy Reynolds’s remaining shares in order to gain access to the company’s “game-changing” e-cigarette technology. Instead, Reynolds has agreed to make the technology available to BAT without adequate compensation to Reynolds’s public shareholders on terms that are still undisclosed.” The suit naming members of the RAI Board of Directors and BAT as defendants also alleges the Board agreed to allow BAT to retain its 42 per cent stake by purchasing additional RAI shares below fair value.
Vuse was introduced this summer, and took a two-thirds share of the e-cig market in Colorado, the first state in which it was introduced, court documents show. The technology sharing pact with BAT also includes heat-not-burn, in which RAI is a leader, according to the amended complaint.