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CNBC Exclusive: CNBC Transcript: Reynolds American CEO Susan Cameron Speaks with David Faber Today

WHEN: Today, Tuesday, July 15th

WHERE: CNBC's "Squawk Alley"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Reynolds American CEO Susan Cameron today. Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000292723

All references must be sourced to CNBC.

CARL QUINTANILLA: IT'S THE DEAL OF THE MORNING. REYNOLDS AMERICAN ACQUIRING LORILLARD. ABOUT 27 BILLION IN CASH AND STOCK. LET'S SEND IT OVER TO DAVID WHO HAS THE CEO OF REYNOLDS AMERICAN, DAVID.

DAVID FABER: THAT IS RIGHT. A DEAL, OF COURSE, A LONG WAY IN WAITING FOR ONE OF A GREAT COMPLEXITY AS WELL. JOINING ME NOW IN AN EXCLUSIVE INTERVIEW IS REYNOLDS AMERICAN CEO SUSAN CAMERON. VERY NICE TO HAVE YOU ON THE PROGRAM. THANKS FOR JOINING US.

SUSAN CAMERON: THANKS, DAVID. PLEASURE.

FABER: AS I SAID, OF COURSE, A LONG TIME IN COMING. CERTAINLY A GREAT DEAL OF PLANNING HAS TO GO INTO A COMPLEX DEAL OF THIS TYPE. AND YET THE RECEPTION IN THE STOCK MARKET THIS MORNING, PROMPTLY YOUR STOCK DOWN OVER 4%. IS THAT A DISAPPOINTMENT TO YOU?

CAMERON: I HAVE TO SAY, DAVID, YOU KNOW, WE'VE WATCHED THIS STOCK RATCHET UP, IF WE GO BACK TO THE PRE-SPECULATION DATE OF FEBRUARY 28th, YOU KNOW, OUR STOCK IS UP 30%, 40%. SO I THINK THE MARKET IS DIGESTING THIS DEAL. IT IS A COMPLICATED TRANSACTION. ONE OF THE MOST COMPLICATED DEALS PROBABLY EVER DONE WITH FOUR PARTIES INVOLVED. I AM ABSOLUTELY CONVINCED OF THE STRATEGIC AND FINANCIAL COMPELLING STATISTICS ON THIS TRANSACTION. I KNOW IT WILL MAKE REYNOLDS AMERICAN A STRONGER COMPANY. IT ENHANCES VALUE FOR SHAREHOLDERS ACROSS ALL FOUR PIECES. AND I'M LOOKING FORWARD TO WORKING WITH REGULATORS TO COMPLETE THIS DEAL IN THE FIRST HALF OF '15.

FABER: I WANT TO TALK ABOUT REGULATION, BUT IN TERMS OF THE PERFORMANCE OF THE STOCK TODAY, OBVIOUSLY, IN LIGHT OF THE FACT THAT IT HAS BEEN UP SHARPLY SINCE AT LEAST WE STARTED HEARING, AND REPORTING ON THIS POSSIBLE TRANSACTION. WHEN YOU SAY YOU PURSUED IT, OBVIOUSLY, BECAUSE STRATEGICALLY YOU THINK IT MERITTED GETTING DONE. WHAT ARE THE CENTRAL COMPONENTS OF YOUR THESIS THAT YOU SAY TO SHAREHOLDERS, THIS IS WHY WE'RE DOING THIS?

CAMERON: THIS IS ABSOLUTELY STRATEGIC WHEN WE LOOK AT THE BRAND PORTFOLIO. REYNOLDS AMERICAN ADDING THE VERY STRONG NEWPORT BRAND WITH 13 SHARE OF MARKET AND ACTUALLY VERY COMPLEMENTARY GEOGRAPHY TO REYNOLDS AMERICAN WILL GIVE US THE MOST BALANCE AND WELL-DIVERSIFIED BRAND PORTFOLIO IN THE SECTOR. SO WE HAVE CAMEL, AND PALL MALL, AND NATURAL AMERICAN SPIRIT. WE ARE BRINGING NEWPORT INTO THAT CIGARETTE MIX. REYNOLDS, FOR INSTANCE, IS VERY STRONG IN THE WEST. NEWPORT IS VERY STRONG IN THE EAST AND THIS WILL ENHANCE OUR GROWTH OPPORTUNITIES AND WE WILL TRULY HAVE A NATIONAL FOOTPRINT. WE ALSO HAVE THE NUMBER ONE BRAND IN THE MOI SPACE –

FABER: GROWTH?

CAMERON: THE NUMBER ONE BRAND IN SNOOSE AND OF COURSE VIEWS ARE VAPOR, NEW DIGITAL VAPOR CIGARETTE IS ALSO PART OF THAT PORTFOLIO.

FABER: GROWTH IN THE TOBACCO INDUSTRY, SOME PEOPLE HEAR THAT AND SAY, WHAT ARE YOU TALKING ABOUT? ISN'T IT JUST A FIGHT FOR MARKET SHARE AMONGST A DECLINING MARKET OVERALL?

CAMERON: YES. I MEAN, CIGARETTES IN THE UNITED STATES HAVE BEEN DECLINING FOR A LONG TIME. BUT THERE IS CLEARLY MARKET SHARE GROWTH, AND IF YOU LOOK AT THE NEWPORT BRAND, WHEN YOU THINK ABOUT THE TOTAL SECTOR, MENTHOL IS DECLINING IN TERMS OF VOLUME AT A SLOWER RATE THAN THE NON-MENTHOL BRANDS. SO NEWPORT ACTUALLY HAS BEEN ON A TRUE GROWTH TRAJECTORY AND OVER THREE DECADES IT HAS CONTINUED TO GROW VOLUME IN MARKET SHARE. SO YOU'RE ABSOLUTELY RIGHT, AND WE ARE COMMITTED TO TRANSFORMING THIS INDUSTRY, AND OFFERING ADULT TOBACCO CONSUMERS ALTERNATIVE WAYS TO ENJOY TOBACCO. AND TO REDUCE THE HARM OF SMOKING. BUT THE CIGARETTE PORTFOLIO HERE IS WELL BALANCED AND DIVERSIFIED. THE MERGERS AND REVENUE GROWTH OPPORTUNITIES WILL ENHANCE THE VALUE TO ALL SHAREHOLDERS AND CERTAINLY CONTINUE TO ENABLE US TO INVEST BEHIND BRAND BUILDING, R & D AND INNOVATION GOING FORWARD.

FABER: ANTITRUST, OF COURSE, IS GOING TO BE A CONCERN HERE. THERE WAS A PACKAGE OF DIVESTITURES WOTH $7.1 BILLION THAT IS GOING TO IMPERIAL. NONETHELESS, MS. CAMERON, A NUMBER OF ANALYSTS WHO HAVE WEIGHED IN THIS MORNING PUT 60% TO 65%, PERHAPS A HIGH OF 70% CHANCE THAT YOU GET THROUGH THE ANTITRUST REVIEW HERE. WHAT GIVES YOU THE CONFIDENCE, THAT IN FACT YOU ARE GOING TO RECEIVE THE APPROVALS YOU NEED FROM THE U.S. GOVERNMENT?

CAMERON: YOU KNOW, WE WORKED VERY HARD WITH IMPERIAL AND WITH LORILLARD, IT WAS IMPORTANT TO ALL OF US TO ENSURE THAT WE PUT TOGETHER A DIVESTITURE PACKAGE THAT WOULD ENSURE WE HAD CONTINUED COMPETITIVENESS IN THE U.S. MARKET. THIS PACKAGE WITH WINSTON, SALEM AND KOOL, AND MAVERICK AND BLU GOING TO IMPERIAL, WE BELIEVE, AND LOOK FORWARD, TO WORKING WITH THE REGULATORS, WILL ENABLE US TO CLOSE THIS TRANSACTION. YOU KNOW, IT'S IMPORTANT TO RECOGNIZE IMPERIAL, WHICH ISN'T AS WELL KNOWN TO U.S. INVESTORS, BUT THEY'RE THE FOURTH LARGEST TOBACCO COMPANY IN THE WORLD BY MARKET SHARE. SO, AND THEY ARE PLANNING TO INVEST BEHIND THESE BRANDS, AND THEY WILL COMPETE HARD. THEY WILL HAVE TEN SHARE OF MARKET, WHEN THIS TRANSACTION CLOSES, AND WE ARE COMPETING, REYNOLDS AT THE END WOULD BE 34%, AND WE ARE BOTH COMPETING WITH AN INDUSTRY LEADER THAT HAS OVER A 50 SHARE OF MARKET. SO THIS HAS ALWAYS BEEN A COMPETITIVE SECTOR, IT ALWAYS WILL BE AND WE'RE CONFIDENT IN THIS DIVESTITURE PACKAGE.

FABER: ON THE CONFERENCE CALL, THERE SEEMED TO BE PERHAPS SOME CONFUSION AROUND THE POTENTIAL COST SAVINGS OF THE DEAL. YOU GOT A NUMBER OF QUESTIONS ON IT. SO I WANTED TO GIVE YOU THIS OPPORTUNITY TO CLARIFY. WHAT IS THE REAL NUMBER HERE AFTER THE DIVESTITURES OF COST SAVINGS AND SYNERGIES THAT YOU ARE EXPECTING AT REYNOLDS? I'VE HEARD $800 MILLION AND I'VE HEARD $300 MILLION. WHAT'S THE NUMBER?

CAMERON: DAVID, IT IS REALLY IMPORTANT, AND I WOULD ENCOURAGE ALL OF YOUR VIEWERS, TO LOOK AT THIS INFORMATION AT REYNOLDS AMERICAN INFO DOTCOM. THAT WHOLE INVESTOR PRESENTATION IS AVAILABLE TO ANYBODY. BUT IT IS $800 MILLION ON A RUN RATE BASIS, AND IF YOU LOOK AT OUR OPPORTUNITY FOR REVENUE GROWTH AND FOR ENHANCING VALUE TO SHAREHOLDER GOING FORWARD, IT'S IMPORTANT TO LOOK AT IT IN THAT CONTEXT.

FABER: FINALLY, WHY VUSE VERSUS BLUE? WHY GET RID OF BLU AND KEEP DEVELOPING YOUR E-CIG?

CAMERON: WE MADE THE COMMITMENT INTERNALLY TO DEVELOP OUR OWN SUPERIOR VAPOR PRODUCT. WE DIDN'T BUY A COMPANY OUTSIDE AND WE BELIEVE THAT VUSE IS A SUPERIOR AND GAME-CHANGING TECHNOLOGY. IF YOU LOOK AT HOW VUSE PERFORMED IN ITS TEST MARKETS, IN COLORADO, IT TRIPLED THE SIZE OF THE E-CIGARETTE MARKET AND IT TOOK OUT 70% MARKET SHARE. SO WE BELIEVE THAT THE PERFECT PUFF EVERY TIME FOR THE VAPOR USER IS A SUPERIOR OFFER, AND VUSE IS ROLLING OUT NATIONALLY AS WE SPEAK AND WE ARE CONFIDENT WE CAN CONTINUE TO COMPETE WITH BLU AND WE ARE – OUR OBJECTIVE IS TO BECOME THE VAPOR AUTHORITY.

FABER: MS. CAMERON, VERY MUCH APPRECIATE YOU TAKING THE TIME THIS MORNING ON, OF COURSE, A DAY OF THE ANNOUNCEMENT OF THIS BIG DEAL. SUSAN CAMERON IS THE CEO OF REYNOLDS AMERICA.

CAMERON: DAVID, THANKS SO MUCH.

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