British American Tobacco Dodges Investor Suit Over Merger

Reynolds American Inc. stockholders saw their voting power dilution suit against British American Tobacco PLC stubbed out by the North Carolina Supreme Court Dec. 7.

Because BAT wasn’t a majority or controlling stockholder in Reynolds, it didn’t owe fiduciary duties to other Reynolds stockholders, Judge Mark Martin wrote for the 4–3 court.

The suit arises from Reynolds’s agreement to buy Lorillard Inc. When talks started in 2012, Reynolds was the second largest tobacco company in the U.S. and Lorillard was the third.

BAT owned 42 percent of Reynolds stock and funded part of the Lorillard transaction by purchasing enough of ...