USA’s biggest tobacco companies set to merge

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Reynolds American and Lorillard, two of the largest tobacco companies in the US, are thought to have agreed on a price and are in the final stages of deal negotiations, it has been revealed.

The well-known cigarette brands Camel and Pall Mall are owned by Reynolds American, whilst Lorilland’s portfolio includes Old Gold, Maverick and Kent – as well as Newport menthols, which make up four fifths of its sales. Combined, the two companies have a market capitalisation of $56 billion, meaning that they can start to catch up with Philip Morris USA, whose Marlboro brand dominates 44% of the market.

The deal is expected to impact hugely on rivals in the UK, including British American Tobacco, which holds a 42% stake in Reynolds American. Imperial Tobacco has also announced that it intends to buy assets from the new group.

Bonnie Herzog, an analyst at Wells Fargo, told the Financial Times: “This transaction in our view will be very positive for the global tobacco industry and could be just the beginning of future transactions with e-cigs/vapour being the underlying catalyst.”

 

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