PM History/2 - Legacy Tobacco Documents Library

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I PM-history/20
for the passive interest, leak from Rupert's 3Oyrold banker son Johann
to Lehman Bros that RJR deal wasn't closed . . .GW phones Rupert to say
PM would gladly take the deal & pledge not to butt in w/Rothman management
-- same deal GW had made yr earlier -- BUTs "I just didn't believe
or understand, if I may put it that way, that Mr . W. really would be
willing to work in partnership" . . .young Rupert, acting w/o his father's
knowledge (he says), invited GW to SoAfrica to present his suit in
person . . .so he goes over April 11 weekend unbeknownst to RJR, interrupting
long planned weekend of fishing off Key Largo to stay at private
guest mansion outside town of Stellenbosch where Rembrandt hq is//GW &
his bankers & mktg team studied the numbers overnight, offers $275 million
compared w/the $350 million price asked for 22% of Rothmans stock,
half its convertible debt & right to sell main int'l R . brands in US &
SOUTH AMERICA ., .following afternoon the two principals met & parted on
a handshake for the original $350 million asking price/said one party to
the deal of Weismans "I've never seen anyone',so crazy to sign a deal//
RJR;s CEO Sticht outraged & all but accused Rupert of a dbl-cross though
Rupert said his talks w/RJR were merely exploratory, foundering on
RJ'R insistence that their eaY be "part ers iien I was alive & control
when I died"/each side has first option to buy out the other in
Rothmans-PM deal . . ."We've never gone wrong investing in the cig business,"
says GW, $120 million + royalties for American (less Canada)
rights to Dunhill, Peter Stuyvesant & Rothmans brands, which have
negligible sales in these mktss Brit-made Va blend cigs have never sold
that well in US . . . ARTNERS HA E MFG & D F CILI S IN
VARIOUS FOREIGN MKTS where it's to their mutual benefit KEY TO DEAL :
PM has first & best shot at deal to control Rothmans . . .Rupert is 64 now
(born in '18?) & likely to yield control as he gets more involved in
philanthropies -
--WHAT BLEW THE HEAD OFF MILLER'S PROFITS, BW 2-1 -82s its mk
shareY rocketed from .4%_in '70 to 22% in '$1~~"'' u rea uosed to
,-B's supremacy has dropped in face of fiercely aggressive counterattack
&'81 Miller net off 20 % sales 'n 2nd strai h dro in
rofit om 8 . ., REASONS s unc~,a~a .-r-te-$9~' ~
ca11y
poor pricing ecisionss„ + what now appears f"d"11a~i~`beeri ill-tini'e~'aii'~itions
~-capaa'3~~7-MiT2br as price leader in '80 had pushed thru two hefty price increases as economy was heading into recession, Busch stalls &
High Life brand esp . slows, Miller sales barely outpace industry's &
net is off 20% . . .rather than yi-eld or sacri£ce volume again, Miller
gave _up b price e ing e~c~gr.:.-- the B'I1'1's~A-B "" ---'-"`-'
made it`s pric`e`3um~` s'~ick
~~V ~ime MSTY~ex-"Wa:Sreadv to follow, industrv was j*+ G~ar-p discounting
war w/prlceZpromo as x~e~y~V_jeapon . . .but sales um s c utdn't Kee ac
~$3.~-bi'Ttion ivr~ 6 plants . . . 2 mi ion plant in Trenton Ohio
due to begin operating in 18'.3//A-B' s mkt share nears 30% &-BTID . h,JQH`s` _ TS
DUE OUT IN JUNF=
-""=-FM'S SAVVY SALES TOOL, Fortune 6-82 : All about the Merit Report,
travelling poll cum computer to promote the brand/$3 million gambit a
yr, GOOD EXAMPLE OF INNOVATION IN PROMO after the TV ad ban
--PM BATTLES BEER & SMOKE RIVALS AS IT ENTERS COLA WAR . WSJ 6-30-8~:
usually buoyant Weissman fee_l_ing the counterpush . saYing E'VE ALW
BEEN A DAVID VS . L . .debutin LIKE LOW-CAFFEINE COLA DRI , an
idea orrowed from others who didn't make it now ~,azze up w hardhitting
adv . + new buildup £or 7-Up//CAN PM PREVAIL. VS . GIANT RIVALS?
(a rival exec likens PM_ t_2 Brit Emnirg in colonial da-yss "They think
they~r~ter, smarter & more sophisticated &, by God, they're going
to have" what they want . . .but realisticallys PM isn't going to be able
to generate the same 20% annual earnings growth they posted for the
'past sterling decade/Mill & 7-U in r £or 2nd
yr + Rothmans deal facing haggling w German & Common Nllct officials re
monopoly . . .94's ongoing inabilit w menthol c now putting menthol ~p
in its NORTHWIND minty brand"~i ~ - g~5oon CAMBRIDGE 'Pm ~ cb p~
at the ultra low mkt (6mg. of tar_ or less) "HAS CLEARTY FyOPPED" w/ v
only 0 .2% of the mkt after 2 yrs_ ~& bi adv outlay + RJR stealing the ~,
PCar oro macho image & giving i t~ o Cam~ .-~instons + RJR attack on rn
Va Slims by softening More, putting the thin dark-brown cig in beige p\
wrapper & package//MILLER : PM cash ave it clo t to shake up beer in- V
dustry, showed athle es swilling Lite to issipate the sissy image (asc.+4
Marlboro did w/filters) . . .A-B s endin O t ion-.,nn._Bud. . .,h.' t intro,
Lowenbrau failin~ to de~t ~ e~ ,Q ;~n n emi :m m aZ~n igY-e
rand is strugg2'in SOFT-DRINK MKTs even tougher
-sledding here, 7 Up has lost mkt share ever since PM took contr ~~#~
dispiriting track record so far, G eci ec'Tby summer o the slide
http://legacy.library.ucsf.edu/tid/fmw44c00/pdf