Richemont separates, renames its BAT stake

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Richemont says its stake in BAT will be listed on the Luxembourg stock exchange and will be renamed Reinet Investments.

About 90% of the stake will be given to its shareholders.

That will leave Richemont's CFR unit to focus on the luxury goods business, holding all of Richemont's luxury assets including Cartier watches, Piaget jewellery and Mont Blanc pens and will continue to be listed on the SWX Swiss exchange.

Richemont shares have been trading below similar companies' and management believes it is because some investors will not buy into firms earning their money from tobacco or alcohol.

But the restructure will also address the changes to tax legislation in Luxembourg, which would make the current group structure significantly less attractive to investors.

Reinet will launch a rights issue whereby shareholders can subscribe for Reinet shares using BAT shares. It is expected that shareholders will be able to subscribe for four new Reinet shares for every five BAT shares although the precise terms have not been set.

The plan still needs shareholder approval.