WASHINGTON -- Convenience-store retailers offered divergent opinions on the merger of Reynolds American Inc. and Lorillard Inc. as the tobacco companies and the c-store industry await the ruling by the Federal Trade Commission (FTC). Reynolds American and Lorillard are expected to meet this week with the FTC ahead of a final decision, people familiar with the matter told The Wall Street Journal.
A final vote by the commission could come as soon as this week, the report said.
Some convenience-store retailers expressed concern about a reduction in competition, which could result in slimmer margins, Dave Woodley, executive vice president of sales and marketing with Altoona, Pa.-based c-store chain Sheetz Inc., told the newspaper. "Less competition is typically not good," he said.
Others believe the effect will be minimal. "We don't think it will change much, if any, of the way we'll do business," Mike Thornbrugh, spokesperson for Tulsa, Okla.-based c-store chain QuikTrip Corp., told the Journal.
The FTC has spent months examining Reynolds's $25 billion planned acquisition of Lorillard, a deal announced in July. The companies are the second- and third-largest U.S. cigarette makers, behind Altria Group Inc. The merger would bring cigarette brands Camel and Newport under one house and boost Reynolds's market share to about 35% from 24%. Altria has top brand Marlboro and a 47% market share.
The face-to-face meetings will give the FTC's commissioners a chance to ask questions and hear directly from company representatives before making a decision, said the report.
When Winston-Salem, N.C.-based Reynolds and Greensboro, N.C.-based Lorillard announced their deal, they sought to address potential government concerns about competition by selling $7.1 billion in cigarette brands and other assets to Imperial Tobacco Group PLC, a U.K.-based global tobacco company.
The FTC is scrutinizing Imperial closely to determine whether the company can emerge as a significant U.S. competitor with the assets sold by Reynolds and Lorillard, including Blu electronic cigarettes and Maverick, Kool, Salem and Winston cigarettes.
The FTC has interviewed competitors, retailers and wholesalers about how consolidation would affect cigarette pricing and competition, the report said.
Click here to view the full Wall Street Journal report.
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