RJR RJ Reynolds Tob Hlds

RJR Shareholders Approve Proposed Combination of Reynolds Tobacco and Brown & Williamson WINSTON-SALEM, N.C., July 28 /PRNewswire-FirstCall/ -- During a special meeting held today, the shareholders of R.J. Reynolds Tobacco Holdings, Inc. (NYSE:RJR) voted to approve the proposed combination of R.J. Reynolds Tobacco Company (RJRT) and the U.S. business of Brown & Williamson Tobacco Corp. (B&W). The transaction is expected to close July 30. Of the 61,401,184 shares voted, 98.77 percent voted in favor of the combination. "This vote demonstrates RJR shareholders' confidence in the value this business combination brings to both the company's financial performance and competitive position," said Andrew J. Schindler, chairman and CEO of RJR. "This transaction will yield more than $500 million in annual operating efficiencies within the next two years, and enable the new R.J. Reynolds Tobacco Co. to compete more effectively in the U.S. cigarette market." The agreement announced in October 2003 between RJR and B&W calls for the creation of a new publicly traded holding company, Reynolds American Inc., with approximately 150 million shares outstanding. Reynolds American will trade on the New York Stock Exchange under the trading symbol RAI once the transaction has closed. Also as part of the transaction, RJR will pay $400 million in cash to acquire the stock of Lane Limited, a British American Tobacco p.l.c. (AMEX:BTI) subsidiary that manufactures several roll-your-own, pipe tobacco and little cigar brands, and distributes Dunhill tobacco products Once the transaction has closed, Reynolds American will have four operating companies: R.J. Reynolds Tobacco Company, Lane Limited, Santa Fe Natural Tobacco Company, and R.J. Reynolds Global Products, Inc. Existing RJR shareholders will own approximately 58 percent of Reynolds American, through a one-for-one exchange of their RJR stock for stock of the new company. Through B&W, BAT will own about 42 percent of Reynolds American Inc. stock. The U.S. Internal Revenue Service has confirmed that the transaction will be tax-free to RJR shareholders and BAT under existing Federal tax law and regulations. Schindler will serve as executive chairman of Reynolds American Inc. for a six-month period after closing, and then become non-executive chairman. Susan Ivey, currently president and CEO of B&W, will serve as president and CEO of Reynolds American Inc. The company's headquarters and operations will be consolidated in Winston-Salem, N.C. On August 2, 2004, a conference call regarding R.J. Reynolds Tobacco Holdings, Inc.'s second-quarter financial results and the creation of Reynolds American Inc. will be webcast at 9:30 a.m. Eastern Daylight Time. The call will be available online on a listen-only basis at http://www.rjrholdings.com/ . Registration for the call is available on the Investors section of the site. Cautionary Information Regarding Forward-Looking Statements Statements included in this news release which are not historical in nature are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements regarding RJR's future performance and financial results include risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks include the substantial and increasing regulation and taxation of the cigarette industry; various legal actions, proceedings and claims relating to the sale, distribution, manufacture, development, advertising, marketing and claimed health effects of cigarettes that are pending or may be instituted against RJR or its subsidiaries; the substantial payment obligations and limitations on the advertising and marketing of cigarettes under various litigation settlement agreements; the continuing decline in volume in the domestic cigarette industry; competition from other cigarette manufacturers, including increased promotional activities and the growth of the deep-discount category; the success or failure of new product innovations and acquisitions; the responsiveness of both the trade and consumers to new products and marketing and promotional programs; any potential costs or savings associated with realigning the cost structure of RJR and its subsidiaries; the ability to achieve efficiencies in manufacturing and distribution operations without negatively affecting sales; the cost of tobacco leaf and other raw materials and commodities used in products; the effect of market conditions on the performance of pension assets, foreign currency exchange rate risk, interest rate risk and the return on corporate cash; and the ratings of RJR securities. In addition, RJR can give no assurance that the proposed formation of Reynolds American Inc., the combination of RJRT and the U.S. assets, liabilities and operations of B&W, and the related transactions, will be consummated, or if consummated, that any expectations relating thereto will be realized. Factors that could affect whether these transactions are consummated include the satisfaction or waiver of certain conditions contained in the business combination agreement and related documents. Due to these uncertainties and risks, undue reliance should not be placed on these forward-looking statements, which speak only as of the date of this news release. Except as provided by federal securities laws, RJR is not required to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. R.J. Reynolds Tobacco Holdings, Inc. is the parent company of R.J. Reynolds Tobacco Company and Santa Fe Natural Tobacco Company, Inc. R.J. Reynolds Tobacco Company is the second-largest tobacco company in the United States, manufacturing about one of every five cigarettes sold in the United States. Reynolds Tobacco's product line includes four of the nation's 10 best-selling cigarette brands: Camel, Winston, Salem and Doral. Santa Fe Natural Tobacco Company, Inc. manufactures Natural American Spirit cigarettes and other tobacco products, and markets them both nationally and internationally. Copies of RJR's news releases, annual reports, SEC filings and other financial materials are available on the company's Web site, http://www.rjrholdings.com/ . DATASOURCE: R.J. Reynolds Tobacco Holdings, Inc. CONTACT: Maura Payne of R.J. Reynolds Tobacco Holdings, Inc., +1-336-741-6996, or cell, +1-336-829-9024 Web site: http://www.rjrt.com/ http://www.rjrholdings.com/

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