Update May 21, 2014: $LO up 11% TODAY On Merger Deal
$LO up 11% in one day, portfolio gets a boost.
By Dana Mattioli and Mike Ester, Dow Jones
Reynolds American Inc. and Lorillard Inc. are in advanced talks to combine in a deal that would dramatically reshape the U.S. tobacco landscape, creating a powerful No. 2 to industry leader Altria Group Inc., according to a person familiar with the matter.
The potential takeover would combine leading Reynolds cigarette brands such as Camel and Pall Mall with Lorillard’s Newport, the top-selling menthol cigarette, at a time when the $100 billion U.S. tobacco industry is wrestling with flagging cigarette sales.
It would also give Winston-Salem, N.C.-based Reynolds a commanding position in the fast-developing market for electronic cigarettes, the battery-powered heating devices that turn nicotine-laced liquid into vapor, and represent a growing alternative to traditional smokes.
Lorillard’s blu e-cigarette has nearly a 50% market share in U.S. gasoline and convenience stores. Reynolds has been slower to dive into e-cigarettes, which could top $2 billion in U.S. sales this year. Reynolds plans to begin a national rollout of its Vuse e-cigarette next month, after launching the product in Colorado and Utah in recent months.
