Lorrillard Tobacco Gets Sold To Reynolds American For $27B

This may raise cigarette prices...
By Alexandra Zaslow
  • In brief
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  • USA Today gives us the low down…

    The following is an excerpt from Reynolds American Buys Rival Lorillard for $27B

    As the U.S. cigarette market dips, the nation’s second-largest tobacco company Reynolds American announced Tuesday that it plans to buy the third-largest one Lorillard for about $27.4 billion, creating a rival for market leader and maker of Marlboros Altria Group.

    Reynolds, maker of Camel and Pall Mall, will acquire Lorillard, maker of Newport, for cash and stock valued at $68.88 per Lorillard share. The deal is one of the largest ever in the tobacco industry and will likely face scrutiny from regulators.

    To allay regulators’ concern, the companies said they would sell some of their smaller brands to Imperial Tobacco for $7.1 billion, making Imperial the third largest U.S. tobacco company with a 10% market share. Reynolds will sell Winston, Kool and Salem, which account for a combined 5% of the cigarette market, and Lorillard will sell its e-cigarette brand blu eCigs, which dominates the expanding market for electronic cigarettes.

  • The Washington Post has the details…

    The following is an excerpt from Reynolds Buys Lorillard in $27.4 Billion Giant Tobacco, E-cig Consolidation

    Reynolds said it would sell some of its brands, including Kool, Salem, Winston and blue eCigs to Imperial tobacco, making Imperial a major U.S. competitor for the first time.

    The deal gives the No. 1 tobacco company, Altria (owner of Philip Morris) a much more formidable competitor. It could also reduce the workforces of the companies and raise cigarette prices.