SUMMARY

This summary highlights selected information from this joint proxy statement/prospectus. It may not contain all of the information that is important to you. You are urged to read this entire joint proxy statement/prospectus and the other documents referred to or incorporated by reference into this joint proxy statement/prospectus in order to fully understand the merger, the merger agreement and the other related transactions and agreements. See “Where You Can Find More Information” beginning on page 260 of this joint proxy statement/prospectus. Each item in this summary refers to the beginning page of this joint proxy statement/prospectus on which that subject is discussed in more detail.

The Companies (See page 74)

Reynolds American Inc.

RAI is a holding company whose operating subsidiaries include the second largest cigarette manufacturer in the United States, R. J. Reynolds Tobacco Company; the second largest smokeless tobacco products manufacturer in the United States, American Snuff Company, LLC, referred to as American Snuff Co.; the manufacturer of the leading super-premium cigarette brand, Santa Fe Natural Tobacco Company, Inc., referred to as SFNTC; Niconovum AB and Niconovum USA, Inc., marketers of nicotine replacement therapy products in Sweden and the United States, respectively; and R. J. Reynolds Vapor Company, referred to as RJR Vapor, a manufacturer and distributor of digital vapor cigarettes in the United States.

RAI’s reportable operating segments are the RJR Tobacco segment, the American Snuff segment, the Santa Fe segment and the All Other segment:

RAI was incorporated in the state of North Carolina on January 2, 2004, and its common stock is listed on the NYSE under the trading symbol “RAI.” On July 30, 2004, the U.S. assets, liabilities and operations of BAT’s wholly owned subsidiary, B&W, then known as Brown & Williamson Tobacco Corporation, were combined with RJR Tobacco. As a result of this business combination, BAT beneficially owns approximately 42% of RAI’s outstanding common stock. RAI’s principal executive offices are located at 401 North Main Street, Winston-Salem, North Carolina 27101, and its telephone number is (336) 741-2000. RAI’s website address is www.reynoldsamerican.com. RAI’s website and the information contained therein or connected thereto are not intended to be incorporated into this joint proxy statement/prospectus.

Lantern Acquisition Co.

Lantern Acquisition Co., referred to as Merger Sub, is a Delaware corporation and wholly owned subsidiary of RAI. Merger Sub was incorporated on July 9, 2014, solely for the purpose of effecting the merger. It has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the merger agreement. Merger Sub’s principal executive offices are located at 401 North Main Street, Winston-Salem, North Carolina 27101, and its telephone number is (336) 741-2000.

Lorillard, Inc.

Lorillard, including its subsidiaries and affiliates, is the third largest manufacturer of cigarettes in the United States. Founded in 1760, Lorillard is the oldest continuously operating tobacco company in the United States. Newport, Lorillard’s flagship premium cigarette brand, is the top selling menthol and second largest selling cigarette brand overall in the United States based on gross units sold in 2013. The Newport brand, which includes both menthol and non-menthol product offerings, accounted for approximately 85.4% of Lorillard’s consolidated net sales for the fiscal year ended December 31, 2013. In addition to the Newport brand, Lorillard’s product line has four additional brand families marketed under the Kent, True, Maverick, and Old Gold brand names. These five brands include 43 different product offerings which vary in price, taste, flavor, length and packaging. In 2013, Lorillard shipped 39.9 billion cigarettes, all of which were sold in the United States and certain U.S. possessions and territories. Lorillard, through its other subsidiaries, is also a leading global electronic cigarette company, with products marketed under the blu eCigs and SKYCIG brands. Newport, Kent, True, Maverick, Old Gold, blu eCigs and SKYCIG are the registered trademarks of Lorillard and its subsidiaries. Lorillard sold substantially all of its major cigarette trademarks outside of the United States in 1977. Lorillard maintains its headquarters and manufactures all of its traditional cigarette products in Greensboro, North Carolina.

Lorillard produces cigarettes for both the premium and discount segments of the domestic cigarette market. Lorillard does not compete in a subcategory of the discount segment that it identifies as the deep discount segment. Premium brands are well known, established brands marketed at higher retail prices. Discount brands are generally less well recognized brands marketed at lower retail prices. Lorillard defines the deep discount subcategory to include brands sold at the lowest retail prices. Deep discount cigarettes are typically manufactured by smaller companies, relative to Lorillard and other major U.S. manufacturers, many of which have no, or significantly lower, payment obligations under the state settlement agreements.

Lorillard common stock is listed on the NYSE under the trading symbol “LO.” Lorillard’s principal executive offices are located at 714 Green Valley Road, Greensboro, NC 27408, its telephone number is (336) 335-7000, and its website is www.lorillard.com. The information contained in, or that can be accessed through, Lorillard’s website is not intended to be incorporated into this joint proxy statement/prospectus.

RAI Special Meeting (See page 76)

General

The RAI special meeting will be held at 9:00 a.m. (Eastern Time), on January 28, 2015, in the Reynolds American Plaza Building Auditorium at RAI’s corporate offices, 401 North Main Street, Winston-Salem, North Carolina 27101. At the RAI special meeting, RAI shareholders will vote upon the Lorillard share issuance and the BAT share issuance. The approval of the share issuance by RAI shareholders is a condition to the obligations of RAI and Lorillard to complete the merger.

Record Date

The RAI board of directors has fixed the close of business on December 20, 2014, as the RAI record date, for determination of the RAI shareholders entitled to vote at the RAI special meeting and any adjournment or

postponement thereof. Only RAI shareholders of record on the RAI record date are entitled to receive notice of, and to vote at, the RAI special meeting or any adjournment or postponement thereof.

As of the RAI record date, there were [—] shares of RAI common stock outstanding and entitled to vote at the RAI special meeting, held by approximately [—] holders of record. Each outstanding share of RAI common stock is entitled to one vote. The number of shares you own is reflected on your proxy card.

Quorum

A quorum of shareholders is necessary to hold a valid meeting. The holders of record, present in person or by proxy at the RAI special meeting, of a majority of the shares of RAI common stock entitled to vote constitute a quorum. Abstentions and broker non-votes will be counted in determining the existence of a quorum.

Required Vote

Share Ownership of and Voting by RAI Directors and Executive Officers

At the RAI record date, RAI’s directors and executive officers and their affiliates beneficially owned and had the right to vote 529,596 shares of RAI common stock at the RAI special meeting, which represents less than 1.00% of the shares of RAI common stock entitled to vote at the RAI special meeting.

It is expected that RAI’s directors and executive officers will vote their shares “FOR” the Lorillard share issuance and “FOR” the BAT share issuance. In addition, under the terms of the subscription agreement, BAT has agreed that at any meeting of RAI shareholders or in any circumstance upon which votes with respect to the share issuance are sought, BAT will vote, or cause to be voted, all shares of RAI common stock beneficially owned by it to approve both the Lorillard share issuance and the BAT share issuance. These BAT shares represent, as of the RAI record date, an aggregate of approximately 42% of the outstanding shares of RAI common stock.

Lorillard Special Meeting (See page 83)

General

The Lorillard special meeting will be held at 10:00 a.m. (Eastern Time), on January 28, 2015, at The Ballantyne Hotel, 10000 Ballantyne Commons Parkway, Charlotte, North Carolina 28277. At the Lorillard special meeting, Lorillard shareholders will vote on:

The adoption of the merger agreement by Lorillard shareholders is a condition to the obligations of RAI and Lorillard to complete the merger.

Record Date

The Lorillard board of directors has fixed the close of business on December 8, 2014, as the Lorillard record date, for determination of the Lorillard shareholders entitled to vote at the Lorillard special meeting or any adjournment or postponement thereof. Only Lorillard shareholders of record on the Lorillard record date are entitled to receive notice of, and to vote at, the Lorillard special meeting or any adjournment or postponement thereof.

As of the Lorillard record date, there were 360,028,072 shares of Lorillard common stock outstanding and entitled to vote at the Lorillard special meeting, held by approximately 80 holders of record. Each outstanding share of Lorillard common stock is entitled to one vote. The number of shares you own is reflected on your proxy card.

Quorum

A majority of the outstanding shares of Lorillard common stock entitled to vote must be present, in person or represented by proxy, to constitute a quorum at the Lorillard special meeting. Abstentions and broker non-votes will be counted as present in determining the existence of a quorum.

Required Vote

The required number of votes for the matters to be voted upon at the Lorillard special meeting depends on the particular item to be voted upon:

Share Ownership of and Voting by Lorillard Directors and Executive Officers

At the Lorillard record date, Lorillard’s directors and executive officers and their affiliates beneficially owned and had the right to vote 1,697,458 shares of Lorillard common stock at the Lorillard special meeting, which represents less than 1.00% of the shares of Lorillard common stock entitled to vote at the Lorillard special meeting.

It is expected that Lorillard’s directors and executive officers will vote their shares “FOR” the adoption of the merger agreement, “FOR” the approval, on a non-binding, advisory basis, of the compensation payments that will or may be paid by Lorillard to its named executive officers in connection with the merger and “FOR” the approval of the adjournment of the Lorillard special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement.

The Merger and the Merger Agreement (See pages 89 and 168)

The merger agreement provides that, on the terms and subject to the conditions in the merger agreement, and in accordance with the DGCL, at the effective time of the merger, Merger Sub will merge with and into Lorillard. As a result of the merger, the separate corporate existence of Merger Sub will cease, and Lorillard will continue as the surviving corporation in the merger and a wholly owned subsidiary of RAI. The merger will not be completed without the approval of the share issuance by RAI shareholders and the adoption of the merger agreement by Lorillard shareholders.

A copy of the merger agreement is attached as Annex A to this joint proxy statement/prospectus. You are urged to read the merger agreement in its entirety because it is the legal document that governs the merger. For more information on the merger and the merger agreement, see “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement” and “The Merger Agreement” beginning on pages 89 and 168, respectively, of this joint proxy statement/prospectus.

As of the date of this joint proxy statement/prospectus, it is not possible to accurately estimate the closing date for the merger because the merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions to RAI’s and Lorillard’s obligations to complete the merger; however, RAI and

Lorillard expect the merger to close in the first half of 2015. Due to the governmental approvals and other conditions to the merger, no assurance can be given as to when, or if, the merger will be completed. Though an end date of July 15, 2015, has been set for the closing of the merger, this end date will automatically be extended by six months if, on July 15, 2015, the only conditions under the merger agreement that have not been satisfied or waived relate to antitrust regulatory matters.

What Lorillard Shareholders Will Receive in the Merger (See page 89)

If the merger is completed, each share of Lorillard common stock (other than treasury shares held by Lorillard and any shares of Lorillard common stock owned by any Lorillard subsidiary, RAI or Merger Sub or shares of Lorillard common stock owned by Lorillard shareholders who have properly made and not withdrawn a demand for appraisal rights pursuant to Section 262 of the DGCL) automatically will be converted into the right to receive the merger consideration, consisting of (1) 0.2909 of a fully paid and nonassessable share of RAI common stock plus (2) $50.50 in cash. No fractional shares of RAI common stock will be issued in the merger, and Lorillard shareholders will receive cash in lieu of any fractional shares.

Based on the closing price of a share of RAI common stock on the NYSE on July 14, 2014, the last trading day before the public announcement of the merger agreement, the merger consideration represented approximately $68.88 in value per share of Lorillard common stock. Based on the closing price of a share of RAI common stock on the NYSE on [—], 2014, the most recent practicable trading day prior to the date of this joint proxy statement/prospectus, the merger consideration represented approximately $[—] in value for each share of Lorillard common stock. Because RAI will issue a fixed number of shares of RAI common stock in exchange for each share of Lorillard common stock, the value of the merger consideration that Lorillard shareholders will receive in the merger will depend on the market price of shares of RAI common stock at the time the merger is completed. As a result, the value of the merger consideration that Lorillard shareholders will receive upon completion of the merger could be greater than, less than or the same as the value of the merger consideration on the date of this joint proxy statement/prospectus or at the time of the RAI or Lorillard special meetings.

RAI’s Reasons for the Merger; Recommendations of the RAI Board of Directors (See page 114)

After consideration and consultation with its advisors, the RAI board of directors unanimously determined that the share issuance is in the best interests of RAI and RAI shareholders, and unanimously approved and declared advisable the merger agreement, subscription agreement, asset purchase agreement, merger, share issuance and divestiture.

The RAI board of directors unanimously recommends that RAI shareholders vote “FOR” the Lorillard share issuance and “FOR” the BAT share issuance. Approval of both the Lorillard share issuance and the BAT share issuance by RAI shareholders is a condition to the obligations of RAI and Lorillard to complete the merger. For the factors considered by the RAI board of directors in reaching this decision, see “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—RAI’s Reasons for the Merger; Recommendations of the RAI Board of Directors” beginning on page 114 of this joint proxy statement/prospectus.

Lorillard’s Reasons for the Merger; Recommendations of the Lorillard Board of Directors (See page 117)

After consideration and consultation with its advisors, the Lorillard board of directors unanimously determined that the merger agreement and the transactions contemplated thereby, including the proposed merger, are fair to, and in the best interests of, Lorillard and its shareholders, and unanimously resolved to approve and declare advisable the merger agreement and the transactions contemplated thereby, including the proposed merger.

The Lorillard board of directors unanimously recommends that Lorillard shareholders vote “FOR” the adoption of the merger agreement. For the factors considered by the Lorillard board of directors in reaching this decision, see “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Lorillard’s Reasons for the Merger; Recommendation of the Lorillard Board of Directors” beginning on page 117 of this joint proxy statement/prospectus.

In addition, the Lorillard board of directors unanimously recommends that Lorillard shareholders vote “FOR” the approval, on a non-binding, advisory basis, of the compensation payments that will or may be paid by Lorillard to its named executive officers in connection with the merger and “FOR” the approval of the adjournment of the Lorillard special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to adopt the merger agreement. See “Lorillard Proposal II: Non-Binding, Advisory Vote on Compensation” and “Lorillard Proposal III: Adjournment of Lorillard Special Meeting” beginning on pages 213 and 214, respectively, of this joint proxy statement/prospectus for a more detailed discussion of the recommendation.

Opinion of RAI’s Financial Advisor (See page 123)

On July 14, 2014, Lazard, RAI’s financial advisor in connection with the merger and the transactions pursuant to the subscription agreement, asset purchase agreement and transfer agreement, rendered to the RAI board of directors an oral opinion, which was confirmed by delivery of a written opinion dated July 15, 2014, to the effect that, as of the date of the opinion and based upon and subject to the matters described in its opinion, the merger consideration to be paid by RAI in the merger (after giving effect to the transactions pursuant to the subscription agreement, asset purchase agreement and transfer agreement) was fair, from a financial point of view, to RAI and to RAI shareholders other than BAT.

The full text of Lazard’s written opinion, dated July 15, 2014, which sets forth, among other things, the procedures followed, assumptions made, matters considered and limitations on the scope of review undertaken by Lazard in connection with its opinion, is attached to this proxy statement/prospectus as Annex C and is incorporated by reference herein in its entirety. The summary of Lazard’s opinion included in the section entitled “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Opinion of RAI’s Financial Advisor” is qualified in its entirety by reference to the full text of the opinion. You are encouraged to read Lazard’s opinion and that section carefully and in their entirety. Lazard’s opinion was for the benefit of the RAI board of directors (in its capacity as such) and Lazard’s opinion was rendered to the RAI board of directors in connection with its evaluation of the merger. Lazard’s opinion was not intended to and does not constitute a recommendation to any shareholder as to how such shareholder should vote or act with respect to the merger (or, for the avoidance of doubt, the transactions pursuant to the subscription agreement, asset purchase agreement and transfer agreement) or any matter relating thereto.

Opinions of Lorillard’s Financial Advisors (See page 131)

Barclays and Centerview were retained by Lorillard as financial advisors to the Lorillard board of directors in connection with the proposed merger and the other transactions contemplated by the merger agreement, collectively referred to as the proposed transaction throughout this section and the summaries of Barclays’ and Centerview’s opinions set forth in this joint proxy statement/prospectus under “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Opinions of Lorillard’s Financial Advisors.” Barclays and Centerview are sometimes collectively referred to in this joint proxy statement/prospectus as Lorillard’s financial advisors. In connection with this engagement, the Lorillard board of directors requested that Lorillard’s financial advisors

evaluate the fairness, from a financial point of view, to the holders of shares of Lorillard common stock (other than shares of Lorillard common stock (1) held by Lorillard as treasury stock or owned by a subsidiary of Lorillard, RAI or Merger Sub immediately prior to the effective time of the merger or (2) owned by shareholders who have properly made and not withdrawn a demand for appraisal rights pursuant to Section 262 of the DGCL, which are, together with any shares of Lorillard common stock held by any affiliate of RAI, collectively referred to as the excluded shares throughout this section and the summaries of Barclays’ and Centerview’s opinions set forth in this joint proxy statement/prospectus under “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Opinions of Lorillard’s Financial Advisors”) of the merger consideration to be paid to such holders pursuant to the merger agreement.

Opinion of Barclays

On July 14, 2014, Barclays rendered its oral opinion (which was subsequently confirmed in writing) to the Lorillard board of directors to the effect that, as of such date and based upon and subject to the assumptions, matters considered, qualifications and limitations described in its written opinion, the merger consideration to be paid to Lorillard shareholders (other than holders of excluded shares) in the proposed transaction was fair, from a financial point of view, to such holders.

The full text of Barclays’ written opinion, dated as of July 14, 2014, which describes the assumptions made, procedures followed, matters considered, qualifications and limitations upon the review undertaken by Barclays in connection with its opinion, is attached as Annex D to this joint proxy statement/prospectus and is incorporated herein by reference. The summary of Barclays’ opinion set forth in this joint proxy statement/prospectus under the caption “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Opinions of Lorillard’s Financial Advisors—Opinion of Barclays” is qualified in its entirety by reference to the full text of Barclays’ written opinion. Barclays’ opinion was provided for the use and benefit of the Lorillard board of directors and was rendered to the Lorillard board of directors in connection with its consideration of the proposed transaction. Barclays’ opinion was limited to and addressed only the fairness, from a financial point of view, to Lorillard shareholders (other than holders of excluded shares) of the merger consideration to be paid to such shareholders in the proposed transaction and did not address any other term or aspect of the merger agreement or the proposed transaction. Barclays’ opinion does not constitute a recommendation to any Lorillard shareholder as to how such shareholder should vote or act with respect to the proposed transaction.

The full text of Barclays’ written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, qualifications and limitations upon the review undertaken by Barclays in connection with its opinion.

Opinion of Centerview

On July 14, 2014, Centerview delivered to the Lorillard board of directors its oral opinion, subsequently confirmed in a written opinion dated as of July 14, 2014, to the effect that, as of such date and based upon and subject to the assumptions, procedures followed, matters considered, qualifications and limitations described in its written opinion, the merger consideration to be paid to the holders of shares of Lorillard common stock (other than excluded shares) pursuant to the merger agreement was fair, from a financial point of view, to such holders.

The full text of Centerview’s written opinion, dated as of July 14, 2014, which describes the assumptions made, procedures followed, matters considered, qualifications and limitations upon the review undertaken by Centerview in connection with its opinion, is attached as Annex E to this joint proxy statement/prospectus and is incorporated herein by reference. The summary of Centerview’s opinion set

forth in this joint proxy statement/prospectus under “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Opinions of Lorillard’s Financial Advisors—Opinion of Centerview” is qualified in its entirety by reference to the full text of Centerview’s written opinion. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Lorillard board of directors (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the proposed transaction and Centerview’s opinion only addressed the fairness, from a financial point of view, as of the date thereof, to the holders of shares of Lorillard common stock (other than excluded shares) of the merger consideration to be paid to such holders pursuant to the merger agreement and did not address any other term or aspect of the merger agreement or the proposed transaction. Centerview’s opinion does not constitute a recommendation to any Lorillard shareholder or any other person as to how such shareholder or other person should vote with respect to the merger or otherwise act with respect to the proposed transaction or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, qualifications and limitations upon the review undertaken by Centerview in connection with its opinion.

Financing of the Merger (See page 149)

RAI currently intends to finance the cash portion of the merger consideration and related fees and expenses with available cash, up to $500 million in borrowings under its existing revolving credit facility, proceeds from the issuance of debt securities, the proceeds of the divestiture and the share purchase and, only to the extent necessary, borrowings under the bridge facility. RAI has announced its intention to pursue financing that would replace or supplement financing available under the bridge facility. There can be no assurance that any replacement or supplemental financing will be available at all or on acceptable terms.

On September 23, 2014, pursuant to the commitment letter, RAI, and certain of its subsidiaries as guarantors, entered into the bridge facility with the agents and lenders party thereto. Under the bridge facility, the lenders are providing a 364-day senior unsecured term loan bridge facility in an aggregate principal amount of up to $9 billion, available for the purpose of financing part of the cash portion of the merger consideration and fees and expenses in connection with the transactions contemplated by the merger agreement. The bridge facility may be drawn only in a single drawing upon the closing of the merger, and not thereafter, matures 364 days after being drawn and may be prepaid (but not reborrowed) without premium or penalty. The amount of the bridge facility available at closing is subject to reduction in accordance with the terms of the bridge facility, including but not limited to reduction upon the contemplated issuance of debt securities expected to be the primary source of the cash consideration to finance the cash portion of the merger consideration and related fees and expenses.

For more information on the financing of the merger, see “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Financing of the Merger” beginning on page 149 of this joint proxy statement/prospectus.

Interests of Certain RAI Directors and Officers (See page 151)

When considering the recommendation of the RAI board of directors that RAI shareholders approve the share issuance, specifically, that RAI shareholders approve both the Lorillard share issuance and the BAT share issuance, you should be aware that some of RAI’s directors and executive officers may have interests in the merger that are different from, or in addition to, those of RAI shareholders generally. The two B&W nominated directors of RAI who are present or former BAT executives may have interests that are different from, or in addition to, those of RAI shareholders generally as a result of the share purchase, pursuant to which BAT (directly or through one or more of its wholly owned subsidiaries) will subscribe for and purchase a number of shares of RAI common stock necessary to maintain its approximately 42% beneficial ownership interest in RAI

immediately following completion of the merger. See “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—General” beginning on page 89 of this joint proxy statement/prospectus. These interests may present such directors and executive officers with actual or potential conflicts of interest. The RAI board of directors was aware of and considered these potential interests, among other matters, in evaluating and negotiating the merger agreement and the merger, in approving the merger agreement, subscription agreement, asset purchase agreement, merger, share issuance and divestiture, and in deciding to recommend that RAI shareholders approve the Lorillard share issuance and the BAT share issuance at the RAI special meeting. RAI’s directors and executive officers will not receive any special compensation the payment of which is contingent upon completion of the merger, share issuance or divestiture.

Interests of Certain Lorillard Directors and Officers (See page 151)

When considering the recommendation of the Lorillard board of directors that Lorillard shareholders adopt the merger agreement, you should be aware that some of Lorillard’s directors and executive officers may have interests in the merger and divestiture that are different from, or in addition to, those of Lorillard shareholders generally. These interests may present such directors and executive officers with actual or potential conflicts of interest. The Lorillard board of directors was aware of these interests during its deliberations on the merits of the merger and divestiture and in deciding to recommend that Lorillard shareholders vote to adopt the merger agreement at the Lorillard special meeting. These interests include:

Assuming the closing of the merger and divestiture was completed on October 31, 2014 and all of Lorillard’s executive officers experienced a qualifying termination on such date, (i) the total compensation potentially payable to Messrs. Kessler, Taylor, Spell, Milstein and Hennighausen is $44,910,758, $13,393,708, $12,651,364, $10,668,590 and $8,106,600, respectively, and (ii) the total value that each of Lorillard’s non-employee directors would potentially receive through the acceleration of the vesting of unvested shares of restricted stock held by each such non-employee director is $199,542 (other than Mr. Levin, who would potentially receive $140,286). For more information on the potential payments and benefits to Lorillard’s executive officers and directors, including the individual components of and the assumptions underlying such payments and benefits, see “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement — Interests of Certain Lorillard Directors and Officers” on page 151 of this joint proxy statement/prospectus.

Board of Directors Following the Merger (See page 159)

Pursuant to the merger agreement, at the closing of the merger, Murray S. Kessler, the current chairman and president and chief executive officer of Lorillard, will be appointed to the RAI board of directors. If for any reason Mr. Kessler is no longer a member of the Lorillard board of directors as of the effective time of the merger or is otherwise unable to serve on the RAI board of directors, Lorillard will designate another individual serving on the Lorillard board of directors who is reasonably acceptable to the RAI board of directors to be appointed to the RAI board of directors.

Regulatory Approvals Required for the Merger (See page 159)

Completion of the merger is conditioned upon the receipt of certain governmental clearances or approvals, including the expiration or termination of the waiting period relating to the merger under the HSR Act.

As of the date of this joint proxy statement/prospectus, the parties have made all requisite filings for regulatory approval of the merger. Specifically, on July 29, 2014, RAI and Lorillard made filings with the FTC to initiate the merger review process. Since making those filings, RAI’s and Lorillard’s respective outside counsel have met with FTC officials to provide additional details regarding the merger and to answer questions posed by agency staff members.

The process for obtaining the requisite regulatory approvals for the merger is ongoing. Under the FTC’s merger review process, the parties expect to remain in regular contact with FTC officials to assist their review of the parties’ submissions to the agency and answer questions and provide clarification regarding the merger. Each of RAI and Lorillard has received a Request for Additional Information and Documentary Material from the FTC, which extends the waiting period under the HSR Act until 30 days after both parties have substantially complied with the request for additional information, unless the waiting period is terminated earlier, or there is an agreed extension of time.

The regulatory filings described above relate to approvals for the merger only. We expect the FTC will consider the subscription agreement and the divestiture in relation to the merger. The parties believe that the divestiture will facilitate regulatory approval of the merger, and have generally requested that regulators review the merger and the divestiture on the same timeline.

There can be no assurances that any of the regulatory approvals described above will be obtained and, if obtained, there can be no assurance as to the timing of such approvals, the ability to obtain such approvals on satisfactory terms or the absence of any litigation challenging such approvals.

For more information on the regulatory approvals required for the merger, see “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Regulatory Approvals Required for the Merger” beginning on page 159 of this joint proxy statement/prospectus.

Certain U.S. Federal Income Tax Consequences of the Merger (See page 161)

The receipt of RAI common stock and cash in exchange for Lorillard common stock in the merger generally will be a taxable transaction for U.S. federal income tax purposes. A U.S. holder of Lorillard common stock who receives RAI common stock and cash in the merger generally will recognize capital gain or loss equal to the difference, if any, between (1) the sum of the fair market value of RAI common stock and cash, including any cash received in lieu of fractional shares of RAI common stock received in the merger, and (2) such holder’s adjusted tax basis in its Lorillard common stock exchanged therefor. The determination of the actual tax consequences of the merger to a holder of Lorillard common stock will depend on the holder’s specific situation. Holders of Lorillard common stock should consult their own tax advisors as to the tax consequences of the merger in their particular circumstances, including the applicability and effect of the alternative minimum tax and any state, local, foreign or other tax laws and of changes in those laws. See “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Certain U.S. Federal Income Tax Consequences of the Merger” beginning on page 161 of this joint proxy statement/prospectus.

Accounting Treatment (See page 164)

The merger will be accounted for using the acquisition method of accounting with RAI considered the acquirer of Lorillard. RAI will record assets acquired, including identifiable intangible assets, and liabilities assumed from Lorillard at their respective fair values at the date of completion of the merger. Any excess of the purchase price over the net fair value of such assets and liabilities will be recorded as goodwill. See “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Accounting Treatment” beginning on page 164 of this joint proxy statement/prospectus.

Treatment of Lorillard Equity Awards (See page 165)

Under the terms of the merger agreement, upon completion of the merger, each outstanding Lorillard stock option and stock appreciation right will be cancelled in exchange for a cash payment equal to the excess, if any, of the equity award consideration over the exercise price, and each outstanding Lorillard restricted stock unit and share of restricted stock will vest and be converted into the right to receive the merger consideration. For more information on the treatment of Lorillard equity awards in connection with the merger, see “RAI Proposal I: Approval of the Lorillard Share Issuance, RAI Proposal II: Approval of the BAT Share Issuance and Lorillard Proposal I: Adoption of the Merger Agreement—Treatment of Lorillard Equity Awards” beginning on page 165 of this joint proxy statement/prospectus.

Listing of Shares of RAI Common Stock and Delisting and Deregistration of Lorillard Common Stock (See page 166)

Under the terms of the merger agreement, RAI is required to use its reasonable best efforts to cause the shares of RAI common stock to be issued in the share issuance to be approved for listing on the NYSE, subject to official notice of issuance, prior to the closing of the merger. It is a condition to both parties’ obligations to complete the merger that such approval is obtained, subject to official notice of issuance. Accordingly, application will be made to have the shares of RAI common stock to be issued in the share issuance approved for listing on the NYSE, where shares of RAI common stock are currently traded.

If the merger is completed, there will no longer be any publicly held shares of Lorillard common stock. Accordingly, Lorillard common stock will no longer be listed on the NYSE and will be deregistered under the Exchange Act.

Litigation Relating to the Merger (See page 167)

RAI, the members of the RAI board of directors and BAT have been named as defendants in a putative class action lawsuit brought in North Carolina state court on behalf of a purported class of RAI shareholders seeking to enjoin the proposed merger with Lorillard. The complaint generally alleges, among other things, that the members of the RAI board of directors breached their fiduciary duties to RAI shareholders by approving the share purchase and the sharing of technology with BAT. The complaint also alleges that there were various conflicts of interest in the transaction. On December 8, 2014, defendants filed motions to dismiss the complaint and motions to stay discovery.

In addition, Lorillard, the members of the Lorillard board of directors, RAI and BAT have been named as defendants in putative class action lawsuits brought in the Delaware Court of Chancery by Lorillard shareholders challenging the proposed merger with RAI. The complaints generally allege, among other things, that the members of the Lorillard board of directors breached their fiduciary duties to Lorillard shareholders by authorizing the proposed merger of Lorillard with RAI. The complaints also allege that RAI and BAT aided and abetted the breaches of fiduciary duty allegedly committed by the members of the Lorillard board of directors. On November 25, 2014, the court granted a motion for consolidation and appointment of lead plaintiffs and lead counsel. On December 11, 2014, lead plaintiffs filed a motion for a preliminary injunction and a motion to expedite.

The shareholder actions seek injunctive relief enjoining the merger, damages and reimbursement of costs, among other remedies. Additional lawsuits may be filed against RAI, Lorillard, the directors of either company and/or BAT in connection with the merger.

No Solicitation of Alternative Proposals (See page 176)

Lorillard has agreed, from the date of the merger agreement until the earlier of the completion of the merger or the termination of the merger agreement, except as otherwise provided in the merger agreement, not to, and not to authorize or permit any of its subsidiaries or any of its or their respective directors, officers, employees or representatives to, directly or indirectly:

Additionally, except as permitted by the merger agreement and described below, Lorillard agreed to (1) immediately cease and cause to be terminated all existing discussions or negotiations with any person

conducted prior to the execution of the merger agreement with respect to a Lorillard takeover proposal or an inquiry or proposal that would reasonably be expected to lead to a Lorillard takeover proposal, (2) request prompt return or destruction of all confidential information previously furnished to any such person or its representatives and (3) immediately terminate all physical and electronic data room access previously granted to any such person or its representatives.

Notwithstanding these restrictions, the merger agreement provides that if at any time prior to Lorillard shareholders adopting the merger agreement, Lorillard receives a written Lorillard takeover proposal that the Lorillard board of directors determines in good faith (after consultation with its outside counsel and financial advisor) is bona fide and constitutes or is reasonably expected to result in or lead to a superior proposal, as defined under “The Merger Agreement—No Solicitation of Alternative Proposals” beginning on page 176 of this joint proxy statement/prospectus, and which did not result from a breach of the non-solicitation obligations set forth in the merger agreement, then Lorillard, and its subsidiaries and its and their representatives at the request of Lorillard, may, subject to compliance in all material respects with the provisions of the merger agreement described in the following paragraph, (1) provide access to its and its subsidiaries’ properties, books and records and furnish information with respect to itself and its subsidiaries to the person making such Lorillard takeover proposal (and its representatives) pursuant to an acceptable confidentiality agreement (provided that any material non-public information that has not previously been provided to RAI must have been provided to RAI prior to or substantially concurrent with the time that it is provided to such person) and (2) participate in discussions regarding the terms of such Lorillard takeover proposal and negotiate such terms with the person making such Lorillard takeover proposal.

The merger agreement also requires Lorillard to (1) within 24 hours of obtaining knowledge of a Lorillard takeover proposal or any inquiry or proposal that would reasonably be expected to lead to a Lorillard takeover proposal, advise RAI in writing of such Lorillard takeover proposal or inquiry or proposal, the material terms of any such Lorillard takeover proposal (including any changes thereto) and the identity of the person making such Lorillard takeover proposal, (2) keep RAI reasonably informed in all material respects on a reasonably current basis of the status and developments of any Lorillard takeover proposal and (3) provide to RAI, within 24 hours after receipt, all drafts of agreements relating to a Lorillard takeover proposal and any written proposals containing material terms of and counterproposals to a Lorillard takeover proposal that are exchanged with the person making the Lorillard takeover proposal or any of its affiliates or representatives.

Completion of the Merger is Subject to Certain Conditions (See page 186)

The obligations of each of RAI and Lorillard to effect the merger are subject to the satisfaction or waiver of the following conditions:

In addition, the obligations of RAI and Merger Sub to effect the merger are conditioned on the absence of any legal restraint issued or promulgated by a U.S. governmental entity under any antitrust laws (as a result of the merger and other than those that may be reflective of the merger agreement, subscription agreement, asset purchase agreement or transfer agreement) that would result in a requirement to dispose of or hold separate, or any prohibition or limitation on the ownership, operation or control of, any business, properties or assets of Lorillard, RAI or any of their respective subsidiaries, which, individually or in the aggregate, would reasonably be expected to result in a substantial detriment.

Termination of the Merger Agreement (See page 187)

The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after the receipt of the requisite shareholder approvals, under the following circumstances:

If the merger agreement is validly terminated, the agreement will become void and have no effect, without any liability or obligation on the part of any party, except in the case of fraud or intentional breach of a covenant or agreement contained in the merger agreement, and except that certain provisions of the merger agreement, including those relating to fees and expenses, effects of termination, governing law, jurisdiction, waiver of jury trial and specific performance, as well as confidentiality, will continue in effect notwithstanding termination of the merger agreement.

The Share Purchase and the Subscription Agreement (See page 191)

Concurrently with the execution of the merger agreement, RAI entered into the subscription agreement with BAT and B&W. Under the terms of the subscription agreement, BAT has agreed, directly or indirectly through one or more of its wholly owned subsidiaries, to subscribe for and purchase, simultaneously with the completion of the merger, a number of shares of RAI common stock such that BAT, directly or indirectly through its affiliates, will maintain its approximately 42% beneficial ownership interest in RAI immediately following completion of the merger for an aggregate purchase price of approximately $4.7 billion, which price corresponds to the per share reference price used to determine the number of shares of RAI common stock to which Lorillard shareholders will be entitled at the closing of the merger. The subscription agreement requires RAI to use the proceeds from the share purchase to fund the merger consideration, and permits RAI to use the proceeds to pay costs and expenses relating to the merger. In addition, RAI has agreed that it will not make certain amendments to the merger agreement or the asset purchase agreement without BAT’s approval.

Further, BAT has agreed that at any meeting of RAI shareholders (or with respect to any written consent of RAI shareholders) held to approve the share issuance, all shares of RAI common stock beneficially owned by BAT as of the RAI record date, representing approximately 42% of the shares of RAI common stock currently outstanding, will be voted to approve both the Lorillard share issuance and the BAT share issuance. BAT has further agreed to vote and cause its applicable subsidiaries to vote (including by written consent) against any action or agreement that would reasonably be expected to materially impede, interfere with or prevent the share issuance and the other transactions contemplated by the merger agreement, subscription agreement, asset purchase agreement and transfer agreement.

A copy of the subscription agreement is attached as Annex B to this joint proxy statement/prospectus. For more information on the share purchase and the subscription agreement, see “The Subscription Agreement” beginning on page 191 of this joint proxy statement/prospectus.

Conditions to Closing the Share Purchase

The obligations of each of RAI and BAT to effect the share purchase are subject to the satisfaction or waiver of the following conditions:

In addition, as a condition to BAT’s obligation to effect the share purchase, RAI must have performed in all respects its obligations under the covenants relating to amendment by RAI of the merger agreement, asset purchase agreement or other agreements related to the divestiture.

Termination of the Subscription Agreement

The subscription agreement may be terminated at any time prior to the closing of the share purchase under the following circumstances:

In addition, BAT may terminate the subscription agreement if RAI breaches or fails to perform its obligations under the covenants relating to amendment by RAI of the merger agreement, asset purchase agreement or other agreements related to the divestiture, whether or not such failure is capable of being cured.

Lorillard Rights Under the Subscription Agreement

Lorillard is an express third party beneficiary of the subscription agreement, with the right to enforce the provisions of the agreement with respect to BAT’s obligations:

in each case subject to the terms and conditions of the subscription agreement.

The sections of the subscription agreement providing for the foregoing obligations may not be amended, modified or waived without Lorillard’s prior written consent. In addition, without Lorillard’s prior written consent, the subscription agreement may not be terminated by mutual written consent of RAI and BAT, and no other amendment, modification or waiver, or grant of consent or extension may be granted under the subscription agreement that is inconsistent with the foregoing.

The Divestiture and the Asset Purchase Agreement and Transfer Agreement (See page 197)

In connection with entry into the merger agreement, on July 15, 2014, RAI entered into the asset purchase agreement and Lorillard entered into the transfer agreement, in each case with Imperial Sub, and, for certain limited purposes of the asset purchase agreement, Imperial, pursuant to which, subject to the closing of the merger, Imperial Sub will acquire, (1) the RAI transferred assets, consisting of certain assets owned by RAI subsidiaries or affiliates, related to the cigarette brands WINSTON, KOOL and SALEM (and under certain circumstances, DORAL) and related to RAI’s subsidiaries’ Puerto Rico business, and (2) the Lorillard transferred assets, consisting of certain assets currently owned by Lorillard subsidiaries or affiliates, related to the “e-vapor” brand blu (including SKYCIG) and the cigarette brand Maverick, as well as Lorillard’s owned and leased real property, including its manufacturing, research and development facilities and headquarters in Greensboro, North Carolina and tobacco receiving and storage facilities in Danville, Virginia, and the transferred employees, together with certain associated liabilities. Pursuant to the transfer agreement, certain Lorillard transferred assets, including Lorillard’s Greensboro facility, Lorillard’s Danville facility, collective bargaining agreements that Lorillard is a party to and the related pension plan and certain liabilities will be transferred by Lorillard subsidiaries to Imperial Sub immediately prior to the closing of the merger. The remaining transferred assets, including all of the RAI transferred assets, and certain related assumed liabilities, will be transferred to Imperial Sub by RAI subsidiaries or affiliates immediately after the closing of the merger. The transactions contemplated by the asset purchase agreement and the transfer agreement are collectively referred to as the divestiture

throughout this joint proxy statement/prospectus. The closing of the divestiture is subject to completion of the merger (although the transactions contemplated by the transfer agreement will occur immediately prior to the merger) and to certain other conditions, including the approval of the divestiture by Imperial shareholders.

The aggregate cash purchase price for the transferred assets is an amount equal to $7,056,202,000, together with the assumption of certain liabilities. The cigarette brands that form part of the transferred assets will be acquired by Imperial Sub without historic product liabilities.

The parties also have entered or will enter into a series of agreements, detailed below, that govern certain pre- and post-divestiture transactions and arrangements, including regarding marketing, manufacturing, intellectual property, transition services and specified settlement obligations. These agreements include the route to market agreement, reciprocal manufacturing agreement, assignment and assumption agreement, intellectual property license agreement, and transition services agreement. Certain activities discussed in this joint proxy statement/prospectus to be conducted by RJR Tobacco or Imperial Sub, as applicable, may be conducted by one of more of their respective affiliates.

A copy of the asset purchase agreement is filed as an exhibit to the registration statement of which this joint proxy statement/prospectus forms a part and is incorporated herein by reference. For more information on the divestiture and the asset purchase agreement, transfer agreement and other agreements entered or to be entered into in connection with the divestiture, see “The Divestiture” beginning on page 197 of this joint proxy statement/prospectus.

Neither RAI shareholders nor Lorillard shareholders are entitled to vote on the divestiture, and no vote with respect thereto is being solicited by RAI or Lorillard. Accordingly, no action is required on the part of RAI shareholders or Lorillard shareholders in connection with the divestiture.

No Solicitation of Alternative Proposals

Except as may be permitted by the merger agreement, the asset purchase agreement requires that RAI not (1) solicit, initiate, entertain, consider, encourage or accept the submission of any proposal or offer from any third party relating to the acquisition of all or substantially all or any significant part of the “business,” as described under “The Divestiture—The Asset Purchase Agreement and Transfer Agreement—Representations and Warranties” on page 199 of this joint proxy statement/prospectus, or (2) participate in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in any effort or attempt by any third party to do or seek any of the foregoing.

Recommendation of the Imperial Board of Directors; Imperial Shareholder Vote

The asset purchase agreement requires Imperial to call and hold a special shareholder meeting and, subject to certain exceptions related to intervening events, requires the Imperial board of directors to recommend that Imperial shareholders approve the transactions contemplated by the asset purchase agreement.

Conditions to Closing of the Divestiture

The obligations of each of RAI and Imperial Sub to close the divestiture are subject to the satisfaction or waiver of the following conditions:

The obligations of Imperial Sub to close the divestiture are further subject to the satisfaction or waiver of the following conditions:

The obligations of RAI to close the divestiture are further subject to the satisfaction or waiver of the following conditions:

Termination of the Asset Purchase Agreement

The asset purchase agreement may be terminated at any time prior to the closing of the divestiture under the following circumstances:

Additionally, the asset purchase agreement may be terminated by RAI, if (1) the Imperial board of directors withholds, withdraws or proposes publicly to withhold or withdraw the recommendation that the Imperial shareholders vote in favor of the transactions contemplated by the asset purchase agreement, and such change in its recommendation has not been withdrawn, (2) Imperial fails to include such recommendation in its shareholder circular, or (3) where the end date is extended, the HSR Act condition to the merger agreement has not been satisfied and the FTC has informed the parties that the completion of the divestiture will not result in the satisfaction of the HSR Act condition, provided that RAI is not in material breach of certain obligations under the merger agreement.

Transfer Agreement

Under the transfer agreement, Lorillard agreed to transfer to Imperial Sub, immediately before the effective time of the merger, certain of the Lorillard transferred assets, including Lorillard’s Greensboro facility, Lorillard’s Danville facility, collective bargaining agreements that Lorillard is a party to and the related pension plan and certain liabilities. Completion of the transfers contemplated by the transfer agreement is subject to the satisfaction of all of the conditions to closing of the merger and the divestiture set forth in the merger agreement and the asset purchase agreement, respectively. The transfer agreement will automatically terminate upon termination of the merger agreement or the asset purchase agreement. Under the merger agreement, Lorillard

agreed that, prior to the termination of the merger agreement, Lorillard will not (1) amend, modify or waive, grant any consent or extension in respect of, or agree to any change to, any term or condition of the transfer agreement, (2) assign any of its rights or obligations under the transfer agreement or (3) execute any right it may have to terminate the transfer agreement.

Termination Fees (See pages 185, 188 and 194)

Termination Fees Under the Merger Agreement

Except as specifically provided in the merger agreement, each party will pay all fees and expenses incurred by it in connection with the merger agreement, subscription agreement, asset purchase agreement and transfer agreement and the transactions contemplated by such agreements. However, upon a termination of the merger agreement, a party will become obligated to pay to the other party a termination fee, in certain specified circumstances.

If the merger agreement is terminated, Lorillard will be obligated to pay a termination fee of $740 million to RAI if:

If the merger agreement is terminated, RAI will be obligated to pay a termination fee of $740 million to Lorillard if the merger agreement is terminated by Lorillard (or in certain circumstances, could have been terminated by Lorillard) because (1) prior to obtaining the approval of RAI shareholders of the share issuance, the RAI board of directors withdrew, modified (in a manner adverse to Lorillard) or proposed publicly to

withdraw or modify (in a manner adverse to Lorillard), its recommendation of the approval of the share issuance, and such change in its recommendation has not been withdrawn or (2) RAI failed to include its recommendation of the approval of the share issuance in this joint proxy statement/prospectus, and such failure has not been remedied.

Termination Fees Under the Subscription Agreement

In the event that either the merger agreement or the asset purchase agreement is terminated and RAI receives a termination fee with respect to either, RAI has agreed to pay the reasonable out-of-pocket costs of BAT with respect to the merger, divestiture and share purchase, not to exceed $30 million (in the event RAI receives a termination fee from Lorillard with respect to the termination of the merger agreement) or $8.5 million (in the event RAI receives a termination fee from Imperial Sub with respect to the termination of the asset purchase agreement).

Termination Fees Under the Asset Purchase Agreement

Pursuant to the asset purchase agreement, if the asset purchase agreement is terminated, Imperial Sub will be obligated to pay a termination fee of $210 million to RAI if the asset purchase agreement is terminated by RAI, or in certain circumstances, could have been terminated by RAI, because (1) prior to obtaining the approval of the Imperial shareholders of the asset purchase agreement and the divestiture, the Imperial board of directors withholds, withdraws or proposes publicly to withhold or withdraw the recommendation that the Imperial shareholders vote in favor of the transactions contemplated by the asset purchase agreement, and such change in its recommendation has not been withdrawn or (2) Imperial fails to include such recommendation in its shareholder circular. However, Imperial Sub will not be required to pay such termination fee if at the time of termination of the asset purchase agreement the RAI board of directors has changed its recommendation that RAI shareholders approve the share issuance.

If RAI or Imperial Sub terminates the asset purchase agreement upon termination of the merger agreement in accordance with its terms, and RAI receives a termination fee from Lorillard in connection with the termination of the merger agreement, then RAI has agreed to pay a $210 million termination fee to Imperial Sub.

Pursuant to the merger agreement, in the event that the asset purchase agreement is terminated and RAI receives a termination fee from Imperial Sub, then, in the event the merger agreement is terminated, RAI will promptly, and in any event within two business days, following the later of (1) the receipt of such termination fee from Imperial Sub and (2) the termination of the merger agreement, pay Lorillard an amount equal to 40% of such termination fee.

Comparison of Shareholder Rights (See page 235)

Lorillard shareholders will have different rights once they become RAI shareholders due to differences between the organizational documents of RAI and Lorillard and differences between North Carolina law, where RAI is incorporated, and Delaware law, where Lorillard is incorporated. See “Comparison of Shareholder Rights” beginning on page 235 of this joint proxy statement/prospectus.

Appraisal Rights (See page 253)

Pursuant to Section 262 of the DGCL, Lorillard shareholders who do not vote in favor of adoption of the merger agreement, who continuously hold their shares of Lorillard common stock through the effective time of the merger and who otherwise comply precisely with the applicable requirements of Section 262 of the DGCL have the right to seek appraisal of the fair value of their shares of Lorillard common stock, as determined by the Delaware Court of Chancery, if the merger is completed. The “fair value” of your shares of Lorillard common

stock as determined by the Delaware Court of Chancery could be greater than, the same as, or less than the value of the merger consideration that you would otherwise be entitled to receive under the terms of the merger agreement.

Lorillard shareholders who wish to exercise the right to seek an appraisal of their shares must so advise Lorillard by submitting a written demand for appraisal in the form described in this joint proxy statement/prospectus prior to the vote to adopt the merger agreement, and must otherwise follow the procedures prescribed by Section 262 of the DGCL. A person having a beneficial interest in shares of Lorillard common stock held of record in the name of another person, such as a nominee or intermediary, must act promptly to cause the record holder to follow the steps summarized in this joint proxy statement/prospectus and in a timely manner to perfect appraisal rights. In view of the complexity of Section 262 of the DGCL, Lorillard shareholders who may wish to pursue appraisal rights should consult their legal and financial advisors. See “Appraisal Rights” beginning on page 253 of this joint proxy statement/prospectus.

Under Article 13 of the NCBCA, RAI shareholders will not have rights to an appraisal of the fair value of their shares in connection with the share issuance.

Organizational Structure of RAI Following Completion of the Merger and Divestiture

The following is an organizational chart depicting the estimated ownership percentages of BAT and existing Lorillard and RAI shareholders and the expected organizational structure immediately following completion of the merger and divestiture. This chart excludes certain immaterial and non-operating companies.