Reynolds to Buy Lorillard in $27.4B Tobacco Deal

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July 15 (Bloomberg) -- Reynolds American Inc., the producer of Camel and Pall Mall cigarettes, agreed to buy rival Lorillard Inc. for $27.4 billion including debt in a deal that reduces the 400-year-old U.S. tobacco industry to two major competitors. Olivia Sterns reports on “Bloomberg Surveillance.” (Source: Bloomberg)


We have been expecting the deal to go through for a couple of month and finally saul shares surge on a potential of the deal.

What this is about is creating a duopoly in the american tobacco industry.

This is now reynolds and lorillard joining forces to compete with marbury oh.

Marlboro cigarettes have about 45% of the market share in the u.s., so it is about an industry in a state of structural decline.

They want the size to compete and they are spinning off cash, bringing about $30 billion a year if you look at reynolds combined with lorillard.

It will put them in a better position in the u.s.. will it help them overseas as well?

That is where the real growth is.

That is where the real growth is.

Overall, direct sales in a state of structural decline.

18% of adults now smoke.

Mental cigarettes are declining at a slower pace.

Menthols are holding on, not for their interested in lorillard, because they make newport, and that is where the the strength.

What do you use?


I vamp to the vape.

Are we moving to a duopoly, it's not like a classic business text model -- went out, consolidate.

When we say deal, it is not a deal.

It is a consolidation of an industry.

Ask which you have seen for the past several years as all of these big players buying up smaller brands, essentially letting them die out.

Phillip morris.

Everybody is trying to get into e-cigarettes.

What i think is interesting about this is even the ceo of reynolds came back after she tried to retire.

She vapes herself.

She likes e-cigarettes.

In this deal because what these two countries are doing, regulators want them to spin off assets.

Imperial tobacco is going to come in.

They're going to buy up blue e -cigs.

Bolivia, one big question that seems different than a coke-pepsi duopoly -- is there really pricing power anymore?

Does it make sense to these guys raising prices or does it not work in the cigarette market?

You think about why would anyone want to invest in an industry that is in decline, particularly one selling a carcinogen.

The answer is yes.

They still have rising power.

I don't mean to interrupt.

I does have about eight questions on this.

When you are in london, were people using electric cigarettes?

No, you know the trend globally, you cannot even smoke in paris anymore.

They're still calling them fags.

An e-cigarette is the thing.

In london, they have not laid down the law on e-cigs yet.

You cannot vape in a closed space, you cannot vape in front of most buildings within 30 feet.


It is not real smoke, is it?

Yes, but it is being treated as smoke.

What you're talking about is the regulatory uncertainty.

Why are you investing in e-cigarettes when you do not know how it will play out, and why are you buying in the big menthol brand when the government may in them altogether?

They are trying to get ahead of the brand.

Thank you, olivia sterns.

It is a huge megadeal.

Almost 28 billion dollars worth.

We have retell sales coming out at 8:40 a.m..

This text has been automatically generated. It may not be 100% accurate.


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