In a historic move marking the end of a nearly 80-year relationship with the tobacco industry, Johann Rupert’s Reinet Investments announced its complete exit from British American Tobacco (BAT).
In reaction, Reinet shares soared on Tuesday, rising 8.75% at R459.43, making it one of the top-performing stocks and valuing it at about R90bn.
The deal, which involves the sale of 43.3-million shares, or just under 2% of the R600bn-plus tobacco behemoth, at £28.20 each, coughs up £1.221bn in cash for one of the richest families in SA.
The Rupert dynasty’s association with the tobacco industry dates back to the 1940s when Anton Rupert founded the Voorbrand Tobacco Company, later known as Rembrandt. By the mid-20th century, Rembrandt had cemented its place as a top player in the industry, listing on the JSE in 1956 and branching out into banking, mining and financial services.
By 1999 the family merged his tobacco giant, then the world’s No4 tobacco maker, known as Rothmans International, with BAT, the world’s second-largest cigarette producer.
The placing was completed through an aftermarket accelerated bookbuild process, which started on January 13, Reinet said on Tuesday. JPMorgan is acting as the sole global co-ordinator and bookrunner for the placing.
For Reinet, which was spun out of Remgro during the global financial crisis, the transaction boosts its cash reserves, opening the door for fresh investment opportunities. Still, the move strips Reinet of a steady stream of dividend income from an investment that once made up nearly a quarter of its €6.6bn (about R128bn) net asset value.
It leaves Reinet with a host of other investments, spanning stakes in one of the largest players in the UK pension insurance market, Pension Insurance Corporation, Trilantic Capital Partners, a private equity outfit, and Grab Holdings, a $20bn super app platform operating in Southeast Asia.
“Following the settlement and completion of the placing, which is expected to take place on January 16 2025, Reinet and its subsidiaries will have fully exited their position in BAT and will no longer hold any interest in BAT,” it said.
The cash windfall will be redirected to Reinet’s diversified portfolio, it said.
Separate from the placing, during November and December 2024, Reinet — via a subsidiary — sold 5-million BAT shares through a dribble-out process, or the gradual sale of the shares until the entire block is offloaded, on the London Stock Exchange, fetching about £148.5m.
Earlier, about 11.1-million BAT shares were used as a pledge, or collateral, for Reinet borrow loans. These shares were returned to Reinet once it paid off all the loans early in January 2025 and were part of Reinet’s remaining BAT shares.
Reinet was spun off from Remgro during the global financial crisis. At the time, BAT was its largest investment. However, the group has rebalanced its portfolio since 2009 and today BAT — which used to account for about 80% of Reinet’s net asset value — accounts for just 24%.
The Rupert family’s exit from BAT symbolises the end of a legacy built over nearly eight decades. The move comes as the broader tobacco industry faces regulatory pressures, changing lifestyles and rampant illicit tobacco, prompting the sector to look to alternatives such as vaping to reinvent itself.
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