Reynolds Tobacco Merger Is Biggest Deal Led by Female CEO

When Reynolds American Inc. announced plans to buy Lorillard Inc. for about $25 billion yesterday, it didn’t just mark the biggest tobacco merger in decades. The transaction also was the largest deal ever orchestrated by a woman: Reynolds Chief Executive Officer Susan Cameron.

The event represents a milestone for female executives, even if it’s been slow in coming, said Ashleigh Shelby Rosette, a professor at Duke University’s Fuqua School of Business in Durham, North Carolina. While women represent 50 percent of the workforce, they only account for about 5 percent of top leaders, she said. That means they aren’t often in a position to execute a blockbuster deal.

“Progress is being made,” she said. “It also highlights how far we have to go.”

Cameron, who had previously served as Reynolds’s CEO from 2004 to 2011, retook the position this year and was key to pushing through the Lorillard takeover after on-again, off-again talks. When the merger closes, which is slated for the first half of next year, Cameron will stay on as head of the combined business in Winston-Salem, North Carolina.

Her work transformed unfocused negotiations into “a very compelling transaction that our board could support,” Lorillard CEO Murray Kessler said in an interview. “She was extremely helpful in bringing that home.”

Virginia Slims

Women have a complicated history with the tobacco industry, with cigarettes serving as symbols of stigma and later empowerment. In the 1960s and ’70s, tobacco marketing began tapping into women’s aspirations by touting cigarettes as markers of modernity and independence. The Philip Morris brand Virginia Slims typified the approach with its “You’ve Come a Long Way, Baby” slogan.

Prior to that campaign in the 1970s, rates of smoking were much higher among men than women in the U.S., said Karen Messer, chief of the division of biostatistics and bioinformatics at the University of California at San Diego.

“It was only with targeted marketing to women that smoking rates equalized between the two genders,” Messer said. That’s now continuing overseas, she said. “The tobacco industry is marketing with the theme of women’s empowerment and women’s equality across the developing world.”

Cameron is one of only 25 female CEOs at Fortune 500 companies. Barbara Rentler of Ross Stores Inc. became the most recent addition to the list last month.

Women are frequently brought in to lead companies in need of change or crisis management, a situation Rosette calls “the glass cliff.” That means even the most capable CEOs can struggle to succeed.

The cigarette industry faces the dual challenges of declining sales and tightening regulations, putting it in that category. Imperial Tobacco Group Plc, a British company that will inherit some of Lorillard’s brands as part of the Reynolds deal, also is run by a woman.

“Smoking is one of these types of industries where you really don’t know what’s going to happen in the future,” Rosette said. “So to have a woman at the helm of that position and to be placed at the glass-cliff position, it’s something we’ve seen before.”

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