Merger With Lorillard Would Beef Up Reynolds Tobacco Portfolio

Jul 16, 2014

Reynolds American Tobacco stands to acquire the Newport brand of cigarettes if its merger with Lorillard goes through.
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Reynolds American plans to acquire Lorillard as part of a $27 billion merger. The deal would bring together the second- and third-largest tobacco companies in America.

Reynolds owns the popular Camel and Pall Mall cigarettes, but now they stand to acquire Lorillard's iconic Newport brand.

Reynolds President Susan Cameron said she's had her eye on it for some time.

“Would it be a strategic dream to have Newport in the Reynolds American portfolio? And I have always said, yes, absolutely,” Cameron says. “And I think the transaction that we have worked to construct here delivers that brand into our portfolio.”

Newport has grown more popular in recent decades, and made up 12-percent of the overall cigarette market last year. In an effort to ward off concerns about a monopoly, Winston-Salem based Reynolds and Greensboro-founded Lorillard have agreed to sell off several brands to Imperial Tobacco. That company stands to become the third largest in the U-S market.

Under the deal, Imperial would buy the Salem, Winston, Kool, and Maverick cigarette brands, as well as the Blu e-cigarette for $7 billion. Reynolds would retain its VUSE e-cig, and gain Lorillard's Newport cigarette brand.

The Federal Trade Commission hasn't weighed in on the deal yet, but Cameron said she's not worried.

“We are very confident that making Reynolds American a much stronger number-two player and Imperial becoming a 10-percent market share company with a good portfolio of brands and an e-cigarette contender, will ensure the competitive landscape stays as fierce as it always has been.”

As part of the deal, Imperial would acquire Lorillard's research facilities in Greensboro, and about 2,900 employees.