Kent Maker Demonstrates Positive Jump

August 15th, 2014 00:00

Lorillard, the third major seller of tobacco products in the U.S., demonstrated positive results within the last two years in New York trading on speculation that Reynolds American will suggest a price for the company.

Reynolds has employed the investment bank Lazard to take a look at a deal, the Financial Times revealed these days. The purchase price might be over $20 billion, the FT reported, quoting unfamiliar people acquainted with the circumstances. It is not clear, however, if Reynolds intends to bid for the entire company, the paper claimed.

The manufacturers are the major sellers of smoking products in the U.S. after Altria Group, and a deal would merge Reynolds brands like Camel and Pall Mall with Lorillard’s Newport and Maverick. Newport is the country's best selling menthol cigarette, based on the company’s official website.

Lorillard shares boosted 9.3 % to $53.61, demonstrating the greatest 24 hours achievement since February 2012. Before present day rise, the stock had dropped 3.2 % this year. Robert Bannon, a representative for Greensboro, North Carolina-based Lorillard, and Bryan Hatchell, a manager for Winston-Salem, North Carolina based Reynolds, both refused to give any comment on all rumors and suppositions.

Reynolds American is 42 per cent possessed by British American Tobacco (BAT), the London-based cigarette maker. An inactive contract blocking the British company from raising its stake comes to an end in July. That might open the door to the businesses operating closer together despite a wider drive for industry consolidation.

U.S. cigarette makers are grappling with decreasing smoking rates, sales taxes and a move toward e-cigarettes. Reynolds American Chief Executive Officer Daniel Delen explained last month that U.S. cigarette unit volumes will decrease by around 3.5 % in 2014 coming in accordance with a long-term tendency.

Lorillard was launched in 1760 and considers itself the oldest continuously managed tobacco company in America. Seeking to capitalize on electronic-cigarette expansion, the company obtained Blu eCigs in 2012 and Skycig in 2013. Blu eCigs comprised about one half of entire local e-cigarette sales in the 4Q, the company spokesman explained last month.

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