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Second and third largest US cigarette makers Reynolds and Lorillard to merge


Second and third largest US cigarette makers Reynolds and Lorillard to merge

A big deal has been announced in the tobacco world. Reynolds American is buying US rival Lorillard for $27.4 (20.15 billion euros) including debt.

The takeover was long expected, and Lorillard’s shares have risen by around a third since February, when it was first rumoured.

Even though sales in the United States are falling about four percent a year as more Americans quit smoking, it remains the biggest tobacco market in the world after China and the most profitable.

Analysts said the deal would help Reynolds, the second-largest US cigarette maker, with 24.7 percent of the market there last year, and Lorillard, which is number three with 12.2 percent, compete with the top firm Altria which has 45.9 percent.

Reynolds said it plans to sell some its brands and some of those of Lorillard, as well as other assets including electronic cigarettes, to Britain’s Imperial Tobacco Group for $7.1 billion (5.22 billion euros).

That is to avoid problems with competition authorities who might otherwise have blocked the deal.

It makes Imperial Tobacco a major player in the US market as it takes over Lorillard’s plants in Greensboro, North Carolina, which employ around 2,900 people.

with Reuters and AFP

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