Big Tobacco Firms Near Deal to Settle Canada Smoking Risk Cases

Three of the world’s biggest tobacco companies are near a possible deal to resolve longstanding claims in Canada that they held back information about the health risks of cigarettes.

Under the proposal from a court-appointed mediator, Canadian subsidiaries of Philip Morris International Inc., British American Tobacco Plc and Japan Tobacco Inc. would pay an aggregate C$32.5 billion ($23.6 billion) to settle product-related litigation, Philip Morris said in a statement Friday.

The Canadian units were ordered in 2019 to pay damages after losing an appeal on class action suits filed by Quebec smokers.

That case stemmed from lawsuits originally filed in 1998, with the ruling marking the first damages awarded against the industry in Canada as smokers argued they were never warned on risks of tobacco use.

Analysts said at the time that so-called Big Tobacco firms risked bankruptcy in Canada from possible payments in the case. The Big Tobacco moniker generally encompasses the three firms named Friday plus Imperial Brands Plc and China Tobacco International HK Co.

The plan “resolves all Canadian tobacco litigation and provides a full and comprehensive release,” BAT said in a statement Friday, adding that it would fund payments with cash on hand and from future sales.

The move could allow BAT to release $2.3 billion in cash tied up as balance sheet liabilities for possible class action suits in Canada, Bloomberg Intelligence’s Duncan Fox wrote in a note.

The proposal remains subject to further negotiation by the parties involved and to claimant votes, as well as to Canadian court orders, Philip Morris said.

If the plan is accepted by claimants, “a hearing to consider approval of the proposed plan would then be expected in the first half of 2025,” the US-based tobacco firm said.

Photo: Photographer: Shelby Knowles/Bloomberg