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===Acquisition===
===Acquisition===
On April 26, 1994, [[British American Tobacco|British American Tobacco Industries, PLC]] announced an agreement to buy [[American Tobacco Company]] for $1 billion.<ref>{{cite news|url=http://articles.baltimoresun.com/1994-04-27/business/1994117068_1_american-tobacco-bat-industries-american-brands|title=B.A.T Industries agrees to buy American Tobacco for $1 billion|work=[[The Baltimore Sun]]|agency=[[The New York Times News Service]]|date=1994-04-27|access-date=2014-11-10}}</ref> A holding company, named "[[Batus Inc.|BATUS, Inc.]]" was created for this purpose.<ref name="wigand">{{cite web |title=Testimony of Jeffrey Wigand - Pascagaula court (29 November 1995) |url=http://jeffreywigand.com/pascagoula.php |website=jeffreywigand.com |publisher=Jeffrey Wigand |access-date=5 October 2018}}</ref> On October 31, 1994, the [[Federal Trade Commission]] filed suit federal court in [[Manhattan]] to stop the deal.<ref>{{cite news|url=http://articles.baltimoresun.com/1994-11-01/business/1994305172_1_american-tobacco-american-brands-cigarette-market|title=FTC sues to stop B.A.T's purchase of American Tobacco Co.|work=Baltimore Sun|agency=[[Bloomberg Businessweek]]|date=1994-11-01|access-date=2014-11-06}}</ref> An April 1995 consent order required that to prevent [[antitrust]] violations, Brown & Williamson had 12 months to sell its [[Reidsville, North Carolina]], plant and nine of the brands acquired in the American Tobacco purchase. [[Lorillard Tobacco Company]] agreed on November 28, 1995, to buy the six discount brands (Montclair, Malibu, Riviera, Crown's, Special 10's, and Bull Durham), but not the three premium brands ([[Tareyton]], Silva Thins, and Tall). In an out-of-court settlement in December 1995, the FTC also required Brown & Williamson to sell the Reidsville plant, but Lorillard did not want it and the company decided to close it.<ref name=FTC/><ref>{{cite news|url=https://www.nytimes.com/1995/11/29/business/bat-unit-to-sell-brands-to-lorillard.html|title=B.A.T. Unit To Sell Brands To Lorillard|last=Collins|first=Glenn|work=[[The New York Times]]|date=1995-11-29|access-date=2014-11-06}}</ref>
On April 26, 1994, [[British American Tobacco|British American Tobacco Industries, PLC]] announced an agreement to buy [[American Tobacco Company]] for $1 billion.<ref>{{cite news|url=http://articles.baltimoresun.com/1994-04-27/business/1994117068_1_american-tobacco-bat-industries-american-brands|title=B.A.T Industries agrees to buy American Tobacco for $1 billion|work=[[The Baltimore Sun]]|agency=[[The New York Times News Service]]|date=1994-04-27|access-date=2014-11-10}}</ref> A holding company, named "[[Batus Inc.|BATUS, Inc.]]" was created for this purpose.<ref name="wigand">{{cite web |title=Testimony of Jeffrey Wigand - Pascagaula court (29 November 1995) |url=http://jeffreywigand.com/pascagoula.php |website=jeffreywigand.com |publisher=Jeffrey Wigand |access-date=5 October 2018}}</ref> On October 31, 1994, the [[Federal Trade Commission]] filed suit in federal court in [[Manhattan]] to stop the deal.<ref>{{cite news|url=http://articles.baltimoresun.com/1994-11-01/business/1994305172_1_american-tobacco-american-brands-cigarette-market|title=FTC sues to stop B.A.T's purchase of American Tobacco Co.|work=Baltimore Sun|agency=[[Bloomberg Businessweek]]|date=1994-11-01|access-date=2014-11-06}}</ref> An April 1995 consent order required that to prevent [[antitrust]] violations, Brown & Williamson had 12 months to sell its [[Reidsville, North Carolina]], plant and nine of the brands acquired in the American Tobacco purchase. [[Lorillard Tobacco Company]] agreed on November 28, 1995, to buy the six discount brands (Montclair, Malibu, Riviera, Crown's, Special 10's, and Bull Durham), but not the three premium brands ([[Tareyton]], Silva Thins, and Tall). In an out-of-court settlement in December 1995, the FTC also required Brown & Williamson to sell the Reidsville plant, but Lorillard did not want it and the company decided to close it.<ref name=FTC/><ref>{{cite news|url=https://www.nytimes.com/1995/11/29/business/bat-unit-to-sell-brands-to-lorillard.html|title=B.A.T. Unit To Sell Brands To Lorillard|last=Collins|first=Glenn|work=[[The New York Times]]|date=1995-11-29|access-date=2014-11-06}}</ref>


The FTC rejected the Lorillard deal on April 10, 1996,<ref name=FTC/> and B.A.T. and Brown & Williamson agreed July 25, 1996, to sell the six discount brands to Commonwealth Tobacco, LLC, a subsidiary of Commonwealth Brands, described as "a small cigarette maker based in [[Bowling Green, Kentucky]], specializing in low-priced, unadvertised brands."<ref name=AP/> The deal would require FTC approval.<ref name=FTC/> Commonwealth Brands, which would also buy the Reidsville plant,<ref name=AP>{{cite news|url=http://www.apnewsarchive.com/1996/Brown-Williamson-Sells-Six-Brands-to-Commonwealth/id-6ae4f940ce187e1afb3dbbd29be5bbaf|title=Brown & Williamson Sells Six Brands to Commonwealth|agency=[[Associated Press]]|date=1996-07-25|access-date=2014-11-07}}</ref> started as Commonwealth Tobacco Company in 1991 and changed its name in November of that year,<ref>{{cite magazine|url=http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=4248580|title=Company Overview of Commonwealth Brands, Inc.|magazine=[[Bloomberg Businessweek]]|access-date=2014-11-06}}</ref> and is now part of [[Imperial Tobacco]].<ref name="auto"/> B.A.T. and Brown & Williamson claimed that since Commonwealth was not one of the five major U.S. cigarette companies, it would meet requirements that Lorillard did not, particularly since Commonwealth would be more likely to compete as a discount manufacturer.<ref name=FTC>{{cite web|url=http://www.ftc.gov/news-events/press-releases/1996/07/ftc-seeks-public-comment-until-august-27-1996-bat-industries-plc|title=FTC Seeks Public Comment Until August 27, 1996, on B.A.T Industries p.l.c. Application for Approval To Divest Six Brands of Discount Cigarettes|publisher=[[Federal Trade Commission]]|date=1996-07-26|access-date=2014-11-10}}</ref> The FTC approved the $36 million deal in October.<ref>{{cite web|url=http://www.ftc.gov/news-events/press-releases/1996/10/ftc-approves-bat-proposal-divest-cigarette-brands-and-certain|title=FTC Approves B.A.T Proposal To Divest Cigarette Brands and Certain Assets to Commonwealth|publisher=[[Federal Trade Commission]]|date=1996-10-18|access-date=2014-11-10}}</ref><ref>{{cite news|title=Brown & Williamson Closes Deal to Sell Plant to Commonwealth|work=[[Greensboro News & Record]]|date=1996-11-02|page=B8}}</ref>
The FTC rejected the Lorillard deal on April 10, 1996,<ref name=FTC/> and B.A.T. and Brown & Williamson agreed July 25, 1996, to sell the six discount brands to Commonwealth Tobacco, LLC, a subsidiary of Commonwealth Brands, described as "a small cigarette maker based in [[Bowling Green, Kentucky]], specializing in low-priced, unadvertised brands."<ref name=AP/> The deal would require FTC approval.<ref name=FTC/> Commonwealth Brands, which would also buy the Reidsville plant,<ref name=AP>{{cite news|url=http://www.apnewsarchive.com/1996/Brown-Williamson-Sells-Six-Brands-to-Commonwealth/id-6ae4f940ce187e1afb3dbbd29be5bbaf|title=Brown & Williamson Sells Six Brands to Commonwealth|agency=[[Associated Press]]|date=1996-07-25|access-date=2014-11-07}}</ref> started as Commonwealth Tobacco Company in 1991 and changed its name in November of that year,<ref>{{cite magazine|url=http://investing.businessweek.com/research/stocks/private/snapshot.asp?privcapId=4248580|title=Company Overview of Commonwealth Brands, Inc.|magazine=[[Bloomberg Businessweek]]|access-date=2014-11-06}}</ref> and is now part of [[Imperial Tobacco]].<ref name="auto"/> B.A.T. and Brown & Williamson claimed that since Commonwealth was not one of the five major U.S. cigarette companies, it would meet requirements that Lorillard did not, particularly since Commonwealth would be more likely to compete as a discount manufacturer.<ref name=FTC>{{cite web|url=http://www.ftc.gov/news-events/press-releases/1996/07/ftc-seeks-public-comment-until-august-27-1996-bat-industries-plc|title=FTC Seeks Public Comment Until August 27, 1996, on B.A.T Industries p.l.c. Application for Approval To Divest Six Brands of Discount Cigarettes|publisher=[[Federal Trade Commission]]|date=1996-07-26|access-date=2014-11-10}}</ref> The FTC approved the $36 million deal in October.<ref>{{cite web|url=http://www.ftc.gov/news-events/press-releases/1996/10/ftc-approves-bat-proposal-divest-cigarette-brands-and-certain|title=FTC Approves B.A.T Proposal To Divest Cigarette Brands and Certain Assets to Commonwealth|publisher=[[Federal Trade Commission]]|date=1996-10-18|access-date=2014-11-10}}</ref><ref>{{cite news|title=Brown & Williamson Closes Deal to Sell Plant to Commonwealth|work=[[Greensboro News & Record]]|date=1996-11-02|page=B8}}</ref>

Revision as of 08:26, 9 February 2022

Brown & Williamson
Tobacco Corporation
Company typeSubsidiary
IndustryTobacco
Foundedin Winston-Salem
FounderGeorge T. Brown
Robert L. Williamson
Defunct2004; 20 years ago (2004) [1]
FateMerged with the other BAT's U.S. business (BATUS, Inc. and R.J. Reynolds to form Reynolds American.[1]
SuccessorReynolds American[1]
Headquarters
United States
Area served
United States
ProductsCigarettes
ParentBritish American Tobacco

Brown & Williamson Tobacco Corporation was a U.S. tobacco company and a subsidiary of multinational British American Tobacco that produced several popular cigarette brands. It became infamous as the focus of investigations for chemically enhancing the addictiveness of cigarettes. Its former vice-president of research and development, Jeffrey Wigand, was the whistleblower in an investigation conducted by CBS news program 60 Minutes, an event that was dramatized in the film The Insider (1999). Wigand claimed that B&W had introduced chemicals such as ammonia into cigarettes to increase nicotine delivery and increase addictiveness.

B&W had its headquarters in Louisville, Kentucky, until July 30, 2004, when the U.S. operations of B&W and BATUS, Inc. merged with R. J. Reynolds, creating a new publicly traded parent company, Reynolds American Inc.[1] Some of its brands had been sold earlier in 1996 to the British tobacco company Imperial Tobacco and British American Tobacco.[2]

B&W was also involved in genetically modifying tobacco (notably the controversial Y1 strain).[3]

History

Early years

Advertisement of the Tube Rose snuff tobacco, from a catalog of the 1920 North Carolina State Fair

B&W was founded in Winston (today's Winston-Salem), North Carolina, as a partnership of George T. Brown and his brother-in-law Robert Lynn Williamson, whose father was already operating two chewing tobacco manufacturing facilities.[4] Initially, the new partnership took over one of the elder Williamson's factories.[5] In February 1894, the new company, calling itself Brown & Williamson, hired 30 workers and began manufacturing in a leased facility.

In 1927, the Brown and Williamson families sold the business to London-based British American Tobacco. The business was reorganized as the Brown & Williamson Tobacco Corporation. Manufacturing and distribution were expanded, and work on a new B&W factory in Louisville was begun.

Acquisition

On April 26, 1994, British American Tobacco Industries, PLC announced an agreement to buy American Tobacco Company for $1 billion.[6] A holding company, named "BATUS, Inc." was created for this purpose.[7] On October 31, 1994, the Federal Trade Commission filed suit in federal court in Manhattan to stop the deal.[8] An April 1995 consent order required that to prevent antitrust violations, Brown & Williamson had 12 months to sell its Reidsville, North Carolina, plant and nine of the brands acquired in the American Tobacco purchase. Lorillard Tobacco Company agreed on November 28, 1995, to buy the six discount brands (Montclair, Malibu, Riviera, Crown's, Special 10's, and Bull Durham), but not the three premium brands (Tareyton, Silva Thins, and Tall). In an out-of-court settlement in December 1995, the FTC also required Brown & Williamson to sell the Reidsville plant, but Lorillard did not want it and the company decided to close it.[9][10]

The FTC rejected the Lorillard deal on April 10, 1996,[9] and B.A.T. and Brown & Williamson agreed July 25, 1996, to sell the six discount brands to Commonwealth Tobacco, LLC, a subsidiary of Commonwealth Brands, described as "a small cigarette maker based in Bowling Green, Kentucky, specializing in low-priced, unadvertised brands."[11] The deal would require FTC approval.[9] Commonwealth Brands, which would also buy the Reidsville plant,[11] started as Commonwealth Tobacco Company in 1991 and changed its name in November of that year,[12] and is now part of Imperial Tobacco.[2] B.A.T. and Brown & Williamson claimed that since Commonwealth was not one of the five major U.S. cigarette companies, it would meet requirements that Lorillard did not, particularly since Commonwealth would be more likely to compete as a discount manufacturer.[9] The FTC approved the $36 million deal in October.[13][14]

Controversy

Jeffrey Wigand's employment with the company

A crucial and historic battle in the war between the tobacco industry and smokers began with Jeffrey Wigand, a doctor of biochemistry with a career focus on health issues who became the Vice President of Research & Development at Brown & Williamson in 1989. He was hired to research safer means of delivering nicotine by reducing the harm of other tobacco compounds.[15] At the time, both the addictiveness of nicotine and the health hazards of cigarettes were well known by the company and the industry, but kept a fiercely guarded secret. Wigand soon found his research and recommendations discouraged, ignored and censored, leading to confrontations with the CEO, Thomas Sandefur. Thwarted and frustrated, Wigand turned his attention to improving tobacco additives, some of which were designed for "impact boosting", using chemicals like ammonia to enhance absorption of nicotine in the lungs and affect the brain and central nervous system faster. Wigand believed this process was a deliberate attempt to increase addiction to cigarettes.

Wigand's disagreements with Sandefur reached a breaking point over a flavor enhancer called coumarin, which he believed to be a lung-specific carcinogen that the company continued to use in pipe tobacco. Wigand demanded its removal, but a successful substitute had not been found and Sandefur refused on the grounds that sales would drop. This argument led Sandefur to fire Wigand in 1993 and to force him to sign an extended confidentiality agreement forbidding him to speak of anything related to his work or the company. The penalty for violating confidentiality was loss of his severance pay, potential lawsuit, and loss of medical coverage. At the time, his daughter suffered from a chronic illness, which required continuous medical attention.

Soon after this incident, the seven executives of "Big Tobacco" testified during congressional hearings that they believed "nicotine is not addictive".[16]

Marketing to children

As early as 1972, Brown & Williamson reviewed concepts for flavored "youth cigarettes", with flavors including cola and apple flavors. In one of their internal memos, Brown & Williamson advisers wrote "It’s a well-known fact that teenagers like sweet products. Honey might be considered."[17] Brown & Williamson's Kool menthol cigarettes were deliberately marketed to teenagers,[18] as revealed by internal documents,[19] which has led to a lawsuit brought by 28 U.S. states plus the District of Columbia and Puerto Rico.[20]

60 Minutes

Despite Jeffrey Wigand's commitment to honor the confidentiality agreement and his initial refusal to talk to Lowell Bergman, a producer for 60 Minutes, Wigand claimed that he and his family were anonymously stalked, intimidated and threatened with death should he talk. At the time, it was thought that Brown & Williamson were behind these intimidation attempts, but, just before the movie The Insider was released, the FBI published a search warrant that was served on Wigand's home, strongly suggesting he fabricated the threats against himself.[21] This claim is countered by an on the record interview by Wigand where he points out the local FBI Field Office was being used by Brown & Williamson via an ex-FBI agent to do dirty work for the company.[22] Bergman provided him with armed bodyguards and, after legal consultation, urged him to testify for the State of Mississippi in a lawsuit against Big Tobacco brought by Mississippi Attorney General Mike Moore, a tactic designed to nullify his confidentiality agreement before revealing the truth in an interview with Mike Wallace for 60 Minutes. The tobacco interests responded by getting a Kentucky judge to issue a gag order that subjected Wigand to arrest upon returning to the Commonwealth.

Wigand's best hope remained in Bergman's pledge to air his story on 60 Minutes. Brown & Williamson threatened CBS with a lawsuit for tortious interference, which could spoil an imminent merger plan with Westinghouse. Instead of the original interview, CBS aired an edited version which did not disclose the crucial details. Bergman bitterly opposed the breaking of his word to Wigand, which eventually led to his resignation from 60 Minutes in 1998.

Brown & Williamson still tried to sue Wigand for theft, fraud, and breach of contract after the sanitized interview was aired, and launched a 500-page smear campaign against him. However, his depositions at the Mississippi and Kentucky state courts were leaked, and were published by The Wall Street Journal as part of an investigative rebuttal to the attacks. CBS News, embarrassed, finally aired the full, original Wigand interview on 60 Minutes, leaving much of the nation in shock.

Forty-six states ultimately filed a Medicaid suit against the tobacco industry, which led to a $368 billion settlement in health-related damages by the tobacco companies.

Brown & Williamson v. Regents of the University of California

Thousands of pages of B&W documents were donated unsolicited to the University of California San Francisco (UCSF) Tobacco Control Archives in 1994.[23] These documents consist primarily of scientific studies on the addictive nature of nicotine and other health effects of tobacco smoke. Also included is documentation of $500,000 in payments to Sylvester Stallone for promoting B&W products in five of his films.[24] B&W sought to permanently remove the disputed material from the library with a suit filed in San Francisco Superior Court. The university contended that all of the documents were in the public domain and should be available to scholars and other interested parties. On May 25, 1995, the Superior Court ruled that these documents should be made available for public review. B&W appealed that decision, and on June 23, 1995, the Court of Appeals refused a temporary restraining order preventing release of the documents. On June 29, the California Supreme Court rejected the company's appeal, allowing UCSF to release the documents.[25]

Brands

See also: Tobacco Master Settlement Agreement
Notes

1 (Export and non-USA markets only)

References

  1. ^ a b c d Reynolds American Inc., SECURITIES AND EXCHANGE COMMISSION report, Juny 30, 2004
  2. ^ a b "Commonwealth Brands, Inc. Company Information". Hoover's. Retrieved 2014-10-30.
  3. ^ Hurt, Richard D.; Robertson, Channing R. (1998-10-07). "Prying Open the Door to the Tobacco Industry's Secrets About Nicotine: The Minnesota Tobacco Trial". JAMA. 280 (13): 1173–1181. doi:10.1001/jama.280.13.1173. ISSN 0098-7484. PMID 9777818.
  4. ^ Robert Lynn Williamson's uncle James Nathaniel Williamson also became a prominent North Carolina businessman. After marrying the daughter of textile pioneer Edwin M. Holt, James Williamson became a principal in the Holt family textile interests and among the leading North Carolina businessmen of his time.[1]
  5. ^ "Thomas Farish Williamson". sites.rootsweb.com.
  6. ^ "B.A.T Industries agrees to buy American Tobacco for $1 billion". The Baltimore Sun. The New York Times News Service. 1994-04-27. Retrieved 2014-11-10.
  7. ^ "Testimony of Jeffrey Wigand - Pascagaula court (29 November 1995)". jeffreywigand.com. Jeffrey Wigand. Retrieved 5 October 2018.
  8. ^ "FTC sues to stop B.A.T's purchase of American Tobacco Co". Baltimore Sun. Bloomberg Businessweek. 1994-11-01. Retrieved 2014-11-06.
  9. ^ a b c d "FTC Seeks Public Comment Until August 27, 1996, on B.A.T Industries p.l.c. Application for Approval To Divest Six Brands of Discount Cigarettes". Federal Trade Commission. 1996-07-26. Retrieved 2014-11-10.
  10. ^ Collins, Glenn (1995-11-29). "B.A.T. Unit To Sell Brands To Lorillard". The New York Times. Retrieved 2014-11-06.
  11. ^ a b "Brown & Williamson Sells Six Brands to Commonwealth". Associated Press. 1996-07-25. Retrieved 2014-11-07.
  12. ^ "Company Overview of Commonwealth Brands, Inc". Bloomberg Businessweek. Retrieved 2014-11-06.
  13. ^ "FTC Approves B.A.T Proposal To Divest Cigarette Brands and Certain Assets to Commonwealth". Federal Trade Commission. 1996-10-18. Retrieved 2014-11-10.
  14. ^ "Brown & Williamson Closes Deal to Sell Plant to Commonwealth". Greensboro News & Record. 1996-11-02. p. B8.
  15. ^ Canadian Press (10 December 2012). "'The Insider,' Jeffrey Wigand, testifies in Quebec tobacco case". Macleans. Retrieved 19 April 2015.
  16. ^ Brenner, Marie (May 1996). "The Man Who Knew Too Much". Vanity Fair. Retrieved 19 April 2015.
  17. ^ Bach, Laura (September 13, 2018). "Flavored Tobacco Products Attract Kids" (PDF). Campaign for Tobacco-Free Kids. Retrieved October 13, 2018.
  18. ^ Fairclough, Gordon (June 30, 2000). "Brown & Williamson Campaign Targets Younger Adult Smokers". The Wall Street Journal. Retrieved 2019-01-15.
  19. ^ Cummings, K. M.; Morley, C. P.; Horan, J. K.; Steger, C.; Leavell, N.-R. (March 2002). "Marketing to America's youth: evidence from corporate documents". Tobacco Control. 11 (suppl 1): –5–i17. doi:10.1136/tc.11.suppl_1.i5. ISSN 1468-3318. PMC 1766057. PMID 11893810.
  20. ^ "States to Sue Brown & Williamson for Kool Campaign". Convenience Store News. 12 May 2004. Retrieved 15 January 2019.
  21. ^ "A Smokescreen From 'The Insider'". The Smoking Gun. 1 July 2010.
  22. ^ Renbaum, Bryan (10 March 2015). "Tobacco whistleblower Jeffrey Wigand goes on the record about 'The Insider'". Baltimore Post-Examiner.
  23. ^ "Tobacco Control Archives". Archived from the original on 2016-10-29. Retrieved 2010-05-30.
  24. ^ Re: agreements between Stallone and Associated Film Promotions Legacy Tobacco Documents Library
  25. ^ "Industry Documents Library". www.industrydocumentslibrary.ucsf.edu.
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