BATS British American Tobacco Plc

By James R. Hagerty 

Patrick Sheehy, who in the 1980s and 1990s headed what is now called British American Tobacco PLC, or BAT, wrote in his 2016 memoir that selling cigarettes was "not a particularly noteworthy or honorable occupation." At least, he added, it provided tax revenue to fund social programs.

Along with Philip Morris Cos. and other cigarette companies, BAT dealt with the health-related stigma of tobacco by diversifying. The maker of Kool and Kent cigarettes bought retailers including Kohl's and Saks Fifth Avenue, along with cosmetics, paper and packaging companies. Unsatisfied with growth prospects in those industries, Mr. Sheehy acquired Farmers Group Inc. and other insurers.

Philip Morris, the maker of Marlboro cigarettes, diversified into Miller beer in the 1970s and later added Jell-O and other food brands.

Then, in the late 1980s, investors turned against conglomerates. By the time Mr. Sheehy retired in 1995, BAT was on its way to becoming a pure tobacco company again.

Mr. Sheehy, who died July 22 at age 88, was largely self-taught as a business leader. His only formal training was a brief course for managerial trainees, including an introduction to accounting. He later said he succeeded because he was impatient for results and blessed with a "large dollop of common sense."

Rising through the BAT ranks, he wasn't impressed by the way the company was run. Most of the directors in 1970, he wrote, "could not read a balance sheet, did not understand cash flow and were unfamiliar with return on investment."

A globe-trotter from early childhood, he was born Sept. 2, 1930, in Burma, now Myanmar. "I hardly knew my parents," he wrote. His Irish father, John Sheehy, became a colonial bureaucrat in British-ruled India and Burma. His mother, the former Jean Newton Simpson, was of Scottish descent.

At age 3, he was sent, along with two sisters, to boarding school in Great Missenden, England. Later he attended a prep school in Hertfordshire, where punishment "involved lying over the side of the bed with one's trousers down and being given 'six of the best' with a thick leather strap."

In 1940, with World War II raging, the 10-year-old Patrick and his sisters were put on a P&O liner and evacuated to Sydney, Australia. Crew members on the ship introduced him to the pleasures of smoking.

At his Jesuit school in Sydney, he later wrote, "discipline was enforced by a thick, fairly rigid, black strap." When the Australian boys taunted him as a "Pom," he ended up fighting one of the ringleaders and later said: "I didn't lose and thereafter I was accepted." He spent school vacations at a sheep farm. His mother was appalled by the Australian accent he adopted. His father sent occasional letters to berate him for poor exam results. Young Pat informed his father he wanted to be a sheep farmer.

In 1944, his father shattered those farming visions by shipping him back to England to attend the Ampleforth boarding school, where he played rugby. When weak exam results thwarted his ambition to attend Oxford, he joined the British Army's Irish Guards at age 18. His duties included serving as a guard at the Bank of England.

After the Army, he wanted to work overseas, which struck him as "more exciting and comfortable with large houses and servants." BAT hired him in 1950. It was one of several companies where he applied BAT first sent him to Copenhagen, where he discovered an odd rule: Employees of the tobacco company there weren't allowed to smoke in the office until after lunch.

Then came sales positions in Nigeria and the Gold Coast, soon to be Ghana, where he helped launch a low-price cigarette, Tusker. He also worked in Jamaica and Barbados before being assigned as a traveling adviser to lagging subsidiaries around the world. A complacent and inefficient BAT had allowed other cigarette makers to take market share. His career advanced when he managed to regain market share from Rothmans International in the Netherlands.

Promoted to the board of directors in 1970, he initially was responsible for Africa and later oversaw Asia, Latin America and the U.S. Sometimes he flew the Concorde from London to New York for meetings and returned home the same day.

When he was promoted to chairman in 1982, Mr. Sheehy promptly expanded the retailing arm by acquiring the Chicago-based Marshall Field department-store chain.

Some of the diversifications, however, weren't working out. The U.S.-based Gimbels stores -- "a shambles," according to Mr. Sheehy -- were sold in 1986. A BAT affiliate, Imasco Ltd. of Canada, couldn't turn around the Hardee's fast-food chain in North America and sold it in 1997.

Mr. Sheehy saw financial services as a better long-term bet than retailing. When Allianz Versicherungs AG of Germany made a hostile bid for Eagle Star Holdings PLC in 1984, BAT charged in as a white knight and acquired the British insurer for the equivalent of about $1.4 billion.

Mr. Sheehy's grand strategy was interrupted in 1989 by a $21 billion hostile takeover bid from a group of investors led by James Goldsmith. They proposed to focus on tobacco and sell everything else. Mr. Sheehy countered by pledging to sell the retailing and other businesses but keep tobacco and insurance, while increasing dividends.

Though the hostile bid failed, BAT's days as a conglomerate were ending. Mr. Sheehy's successor, Martin Broughton, shed the insurance business in 1998 by merging it with Zurich Group.

Mr. Sheehy, who was awarded a knighthood in 1990 and became known as Sir Patrick, is survived by his wife, the former Jill Tyndall, two children and two grandchildren. Outside of work, his passions included skiing and opera. He once flew by Concorde to Luxor, Egypt, to see an outdoor performance of "Aida."

Write to James R. Hagerty at bob.hagerty@wsj.com

(END) Dow Jones Newswires

August 09, 2019 10:44 ET (14:44 GMT)

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