Rothmans International and British American Tobacco in £13BN merger

11 JAN 1999

The Board of Compagnie Financière Richemont AG ('Richemont') announces that Richemont and Rembrandt Group Limited ('Rembrandt') have reached agreement with British American Tobacco p.l.c. ('British American Tobacco') on the terms of a proposed merger of their combined interests in Rothmans International BV ('Rothmans') with British American Tobacco.

Rothmans is presently owned as to two thirds by Richemont and as to one third by Rembrandt. Following the merger, Richemont and Rembrandt will hold a combined 35 per cent. interest in the enlarged British American Tobacco. The 35 per cent. interest will be held by Richemont and Rembrandt in the same proportion as their existing holdings in Rothmans.

The Board believes that Richemont's interests are best served by participating in a larger tobacco business which will have enhanced market positions and a greater scale of operations. Through its shareholding in the enlarged British American Tobacco, Richemont will, together with Rembrandt, retain an investment in the global tobacco industry for the long term and will be able to benefit from the future growth and synergies arising from the combination of British American Tobacco and Rothmans. In the light of the intended dividend policy of the enlarged British American Tobacco, Richemont and Rembrandt will also benefit from the strong cash flow of the combined group.