Subsidiary of British American Tobacco nears settlement in long-running Canadian lawsuit
- ITCAN said: ‘Today marks an important step towards a possible settlement’
- Like other nicotine sellers, BAT is expanding its offerings into “new categories.”
A subsidiary of British American Tobacco (BAT) is close to reaching a settlement in a long-running tobacco case in Canada.
Imperial Tobacco Canada (ITCAN) has been in talks with creditors since losing an appeal in March 2019, which ordered the company and two other cigarette sellers, Philip Morris and Japan Tobacco, to pay CA$15.6 billion in damages.
The appeal concerned a landmark court decision four years earlier, which found that the three companies had failed to adequately warn customers about the health problems associated with smoking.
Legal Issues: A subsidiary of British American Tobacco (BAT) is close to reaching a settlement in a long-running tobacco case in Canada
It is believed to be one of Canada’s largest ever class action lawsuits, involving more than a million smokers in Quebec who failed to quit or developed serious illness as a result of smoking.
After losing the appeal, ITCAN filed for bankruptcy protection under the Canadian Companies’ Creditors Arrangement Act while working to resolve all tobacco-related lawsuits in Canada.
According to Philip Morris, a court-appointed mediator has now proposed that the companies pay C$32.5 billion ($23.6 billion) in damages, although the exact amount each company will pay out is not yet known.
ITCAN said: ‘Today marks an important step towards a possible settlement.
“Since filing for CCAA protection in 2019, ITCAN has worked in good faith under the mediator’s direction to resolve all tobacco disputes in Canada.”
It added: ‘ITCAN supports the settlement framework and structure in the Mediator and Monitor’s plan of action and the progress that has been made, and we remain hopeful that a comprehensive settlement can be reached quickly.
“We look forward to working toward a final agreement that is in the best interests of all stakeholders, including plaintiffs, and bringing this process to a successful conclusion.”
Like other nicotine retailers, BAT is gradually expanding its ‘new category’ offering in response to increased public awareness of tobacco’s harmful effects.
By 2030, it wants 50 million people using its non-combustible goods, such as e-cigarettes, heated tobacco brands and modern oral products.
In the first six months of 2024, the company’s adjusted new category sales rose 3.1 percent to £1.7 billion, supported by strong demand among US customers for its Velo nicotine pouches.
However, total adjusted sales fell 3.7 percent to £12.3 billion, while reported sales fell 8.2 percent due to currency headwinds and the sale of divisions in Russia and Belarus.
British American Tobacco shares were 3.1 per cent lower at £26.43 early on Friday afternoon, making them the biggest fallers on the FTSE 100.
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