Reynolds and Lorillard on Brink of Merger
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Reynolds American, the producer of Camel cigarettes, said it’s in talks to acquire Lorillard in a transaction that would create a closer competitor to U.S. tobacco market leader Altria Inc.
Lorillard also confirmed the discussions in a statement today, following reports that a deal may be close after months of negotiation. British American Tobacco, the U.K. company that owns 42% of Reynolds, said it expects to support the transaction by subscribing for additional shares to maintain its stake. Separately, Imperial Tobacco Group said it’s in talks with the U.S. companies to buy some brands.
The deal — which would follow months of on-again, off- again talks — is complicated by its size and the involvement of several companies. Together, Reynolds and Greensboro, N.C.-based Lorillard have a market value of about $56 billion and annual sales of more than $13 billion, according to data compiled by Bloomberg. Merger speculation has propelled stocks of both companies this year.
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