Tobacco firms will pay £18bn to settle lawsuits

Three of the world’s biggest tobacco manufacturers have agreed to pay a combined C$32.5 billion (£18 billion) to settle all pending tobacco product litigation in Canada.
The Canadian businesses of Philip Morris International, British American Tobacco (BAT) and Japan Tobacco suffered a significant legal setback in 2015 when a Quebec court awarded damages to about 100,000 smokers and ex-smokers.
They alleged that the companies had known since the 1950s that their product caused cancer and other illnesses and had failed to adequately warn consumers.
Following an appeal, four years later a Quebec court upheld the decision that awarded smokers in the Canadian province large sums, forcing the Canadian subsidiaries to each seek bankruptcy protection. They have since been under a court-supervised mediation process to negotiate a possible settlement.
The proposal covers the Quebec lawsuit and ends all pending tobacco product litigation in Canada, including class actions and healthcare cost recovery actions brought by each of the provinces.
In a statement on Friday, Philip Morris said the allocation of the aggregate settlement amount between the tobacco companies remains unresolved.
Jacek Olczak, chief executive of Philip Morris, the New York-listed group, said: “Although important issues with the plan remain to be resolved, we are hopeful that this legal process will soon conclude, allowing RBH [Rothmans, Benson & Hedges, its Canadian unit] and its stakeholders to focus on the future.”
The Canadian subsidiary of BAT, Imperial Tobacco Canada, said the settlement would be funded by the cash and funds generated from the future sale of tobacco products in Canada, “while at the same time maximising recovery for the creditors”.
It added: “It also allows the Canadian tobacco companies to continue operating as a going concern for the benefit of all stakeholders.”
A spokesman for BAT said: “Today marks a positive step towards finding a resolution.”
Shares in BAT were down 3.7 per cent at £26.28 in late afternoon trading on the London Stock Exchange.
A spokeswoman for JTI-Macdonald, a subsidiary of Japan Tobacco, said: “Although we are committed to continuing to work diligently and in good faith with all mediation parties to try to reach a consensual compromise, there are certain critical issues that would need to be resolved if we are to find a settlement plan that is workable.”
The tobacco industry has been battling stricter regulation and legal action around the world, but despite the pressure it remains highly cash-generative and has been investing in new products, such as vapes, heat-not-burn tobacco devices and oral pouches, as it seeks to secure its future.