Tobacco giant Reynolds says it will buy Lorillard

Los Angeles TimesJuly 15, 2014 

Reynolds American Lorillard

MATT ROURKE/ASSOCIATED PRESSCamel is a Reynolds American brand, and Newport is a Lorillard brand. The companies announced a $25 billion deal to combine.

MATT ROURKE — AP

Cigarette giant Reynolds American Inc. agreed to purchase rival Lorillard Inc. for $27.4 billion, gaining additional market share as Americans smoke less.

The deal, announced Tuesday, combines the second- and third-largest American tobacco companies, creating a cigarette behemoth with a projected $11billion-plus in annual revenue.

The United Kingdom's Imperial Tobacco Group is also buying Reynolds' Kool, Salem, Winston, Maverick and blue eCigs brands, along with other assets, for $7.1 billion. And British American Tobacco will invest $4.7 billion in the Reynolds-Lorillard deal to maintain its 42 percent stake in Reynolds.

If the cash, stock and debt transacton closes, the combination of Reynolds, of Winston-Salem, N.C., and Lorillard, of Greensboro, N.C., would be a strong challenger to Altria, the nation's largest tobacco company and parent of Philip Morris.

Reynolds, the nation's second-largest tobacco firm, adds Lorillard's Newport brand to its lineup of Camel and Pall Mall cigarettes. Newport is the nation's most popular menthol cigarette.

The combination could prove fruitful as Americans quit or don't take up smoking, choices driven by health, high taxes and anti-smoking campaigns. Cigarette sales in the U.S. fell 4 percent in 2012, and are projected to keep falling, according to market researcher Euromonitor International.

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