ROTHMANS International is to list a newly formed US$2 billion (about HK$15.6 billion) regional holding company - Rothmans of Pall Mall - on the Hongkong stock exchange in November. In a surprise step, the tobacco giant is sweetening the deal by shelling out some US$319 million in special dividends to existing shareholders of the Singaporean and Malaysian companies that will be swallowed up into the new firm. The merger, which was disclosed earlier in the year when news of talks between the various Rothmans operations leaked out, will bring Rothmans Malaysia and Rothmans Singapore together with subsidiaries in northeast Asia in one holding company. Group finance director Jan Du Plessis said yesterday's combined market capitalisation of the Malaysian and Singaporean operations came to US$1.9 billion. He said: ''Into that we are adding the assets of the northeast Asia business and taking out US$319 million, so we are looking at a market capitalisation of between US$1.5 billion and $2 billion.'' There would be a total of 1.15 billion shares in the new company, giving a maximum price of around US$1.72. Speaking from London, Rothmans International executive chairman Lord Swaythling said: ''We regard Hongkong as the gateway to the future and, of course, rate it for its proximity to China which is a very important market for us in the future. ''We believe this move will utilise our management and financial resources in the region, for all the companies concerned.'' The tobacco giant both manufactures and sells in China. Rothmans of Pall Mall - consisting of 79 per cent of the Malaysian firm, 20 per cent of Rothmans Singapore and one per cent of Rothmans International's northeast Asia tobacco markets - will also seek listings in Kuala Lumpur and Singapore. To create the new company, new shares will be swapped for old shares in Rothmans Malaysia and Rothmans Singapore. Rothmans Malaysia shares will be bought up at a rate of one for 3.2 new Rothmans of Pall Mall shares, while the Singaporean paper will be exchanged on the basis of one for two new shares. Yesterday, the Malaysian shares closed at M$13.80 and the Singaporean scrip at S$7.85. Special interim dividends, totalling about US$319 million, will sweeten the deal to the tune of M$2 per Malaysian share and S$1.45 per Singaporean share. The dividend bonanza, not a feature of the original proposals, came in during later negotiations that culminated in yesterday's announcement. A statement put out by the group said: ''The special interim dividends reflect the substantial cash balances built up in Rothmans Malaysia and Rothmans Singapore over recent years. ''But they will leave Rothmans of Pall Mall with sufficient financial strength to continue the development of the regional businesses and to pursue a progressive dividend policy.'' Rights to Rothmans International's northeast tobacco markets will be acquired under exclusive long-term trademark agreements, again with new shares. Half of these shares are to be placed in the Hongkong market, after which Rothmans International will have a 50 per cent stake in Rothmans of Pall Mall. The agreement remains subject to certain shareholder and regulatory approvals and court sanctions.
