CNBC’s David Faber is reporting that tobacco majors Lorillard Inc. (LO) and Reynolds American Inc (RAI) are likely to merge before the end of this month.
“They have not fully negotiated terms,” and “the complexity of the deal could mean that it is once again knocked off course for some time”, Faber said [via Dow Jones], noting that the deal that would combine the second and third largest tobacco companies had previously been discussed and reported. “But at this point it does seem to have a good amount of momentum pointing to an announcement before the end of this month,” Faber said, citing sources.
Back in May it was reported that Reynolds American would buy Lorillard, whose Newport brand is the nation’s top-selling brand in the menthol category, with a 35% market share, in a deal valued at $55 billion.
Following Faber’s report, shares of Greensboro, NC-based Lorillard, which have increased 27% year-to-date, giving it a market value of more than $23 billion, gained more than 5% and shares of the $33 billion market cap Reynolds American Inc, the maker of Camel cigarettes, jumped 2.33%.