After months of speculation swirling around a deal that would transform the U.S. tobacco market, Reynolds American Inc., Winston-Salem, N.C., announced that it had entered into a definitive agreement to acquire Lorillard Inc., Greensboro, N.C., for $27.4 billion. Simultaneously, in attempts to ease concerns over a tobacco monopoly, both Reynolds and Lorillard will l divest a number of brands and assets to Imperial Tobacco LLC, making the Bristol, U.K.-based parent company of Commonwealth-Altadis Inc. a solid No. 3 player in the United States.
The New Reynolds-Lorillard
By combining the No. 2 and No. 3 tobacco companies in the United States, the new Reynolds stands to better compete with No. 1 Altria Group Inc. Once the deal is complete, Reynolds stands to own a 34.1% share of the U.S. tobacco market; it will also boast the second and third best-selling cigarette brands (and top-selling menthol brand) in Newport and Camel, the No. 1 moist-snuff brand (Grizzly) and six of the top 10 snus SKUs.
Sources: R.J. Reynolds, Santa Fe, Lorillard, Information Resources Inc./Capstone, c-store/travel plaza UPC shipments from McLane Co., c-store sales from The Nielsen Co., Swedish Match North America, Wells Fargo Securities LLC
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