ROB ROSE: BAT sees its butt
It’s been a rough week for BAT — a R197bn loss in value and, now, confirmation that British authorities are probing its shady deals in Africa
The dominoes are starting to tumble for the most Machiavellian company on the JSE, British American Tobacco (BAT). The 115-year-old BAT is immense, operating in 200 countries with more than 50,000 staff. One in eight of the world’s 1bn smokers use its brands, which include Dunhill, Rothmans and Peter Stuyvesant. Last year, its £14.7bn in revenue dwarfed the combined GDP of Rwanda and Guinea.
The firm’s gargantuan size has, however, fostered an unwholesome sense of impunity. BAT has become a prime exponent of the dubious tactic of hearing an oncoming train and shutting one’s eyes in the tragically mistaken belief this will protect one from being hit. Now, the inevitable has happened. On Friday, the US’s Food & Drug Administration (FDA) tabled a radical new plan to "lower nicotine levels in cigarettes to non-addictive levels". FDA commissioner Scott Gottlieb said cigarettes remain "the only legal consumer product that, when used as intended, will kill half of all long-term users" — 480,000 American deaths a year. It was a declaration of war on tobacco firms. And it had a predictably devastating effect on BAT’s stock, which slid 9% on the JSE over two days. For a firm worth R2.2trillion, that’s a loss in value of R197bn in just 48 hours of stock-market carnage. It’s hideous timing too: BAT has just completed the $49bn purchase of RJ Reynolds, which increases its exposure t...
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