|December 3, 2009|
|No. 2 Cigarette Co. Wants Smokers to Quit|
|By Kevin McCauley|
|Reynolds American Inc., the country's No. 2 cigarette company, apparently wants Americans to kick the habit. |
That's one optimistic take on the $44M deal engineered by the good people in Winston-Salem, N.C., to acquire Sweden's Niconovum, marketer of the Zonnic brand of nicotine replacement products.
Niconovum says the deal will provide it with capital to expand its nicotine gum, mouth spray and pouches to new markets and step up product development. RAI spokesperson Maura Payne told today's Wall Street Journal that required Food & Drug Administration approval for Zonnic to be marketed here is "at least a couple of years away."
Many will be anxiously waiting.
Some skeptics, however, cast a jaded eye on RAI's move into the anti-smoking product market, especially since R.J. Reynolds Tobacco owns five of the top 10 brands in the U.S. (Camel, Kool, Pall Mall, Doral and Winston ó according to RAIís 10-K). the doubters remember other instances in which corporations gobbled up businesses that posed a threat.
The great streetcar scandal pops into some minds. General Motors, Firestone Tire, Standard Oil of California, Phillips Petroleum and Mack Truck were forces behind a holding company called National City Lines that from 1936-50 gobbled up street car lines in more than 40 cities in the U.S. including New York, Los Angeles, Philadelphia, Detroit, Minneapolis, Baltimore and St. Louis.
Those transit systems were ultimately torn down and replaced with GM buses. National City companies were convicted on a federal conspiracy charge in 1949 and fined a whopping $5,000 each. Global warming advocates dream for the return of those streetcars.
More recently, Exxon spent $1.2B in 1979 to purchase Reliance Electric, which was then on the cutting edge of producing electric motors for cars. The Federal Trade Commission charged Exxon with "reducing competition."
The oil giant was cleared after a three-year tussle. Exxon sold off Reliance in 1986. GM today is pinning much of its future on the success of its Volt electric car.
This blogger is certain that a blue-chip like the $9B Reynolds American has the best intentions for Niconovum. RAI CEO Susan Ivey said in a release that the acquired lines "have great potential in meeting consumer demand and public health objectives."
Best of luck. Many healthcare activists will keep a very close eye on Niconovum's performance under RAI to make sure the acquisition is more than just a PR move.
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