Reynold’s American, the US’ second largest tobacco company has officially agreed to buy Lorillard, the third largest US tobacco company for $27.4 billion. Reynold’s American is most noted for manufacturing Camel and Pall Mall cigarette brands while Lorillard is best known as the maker of Newport cigarettes. To assuage anti-trust concerns, both Reynolds and Lorillard agreed to sell some of its smaller brands to Imperial Tobacco. For $7.1 billion, Imperial Tobacco will buy Kool and Salem from Reynolds and Blu e-cigarettes from Lorillard. Through this purchase Imperial becomes the new third largest US tobacco company with 10% marketshare.
In the face of declining smoking rates and an evolving tobacco landscape with the entrance of e-cigarettes, the merger is a way for Reynolds and Lorillard to increase competition for the market leader, the Altria Group. Altria is the manufacturer of Marlboro cigarettes, a brand that accounts for nearly 50% of cigarettes sold in the US.
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For more information on the Reynolds-Lorillard merger, read the New York Times and USA Today articles.