Tobacco company Reynolds American Inc wants to dissociate one e-cigarette brand and four tobacco cigaretts brands in order to win approval from Federal Trade Commission with its $27.4 billion deal with Lorillard Inc.
With 3-2 vote the comission signed an important deal in the course of which Reynolds purchases Newport cigarettes brand that is second popular brand in the USA and top-selling brand among menthols.
According to FTC, the proposed agreement enters a 30-day public-comment period. The final decision will be announced on June 25.
The two tobacco companies still do have some probalems to overcome. Thus they need to receive an approval from a federal District Court to sell five brands to Imperial Tobacco Group Plc for $7.1 billion.
In case both deals take place and get finished successfully, Philip Morris USA (51%) and Reynolds (34%) would control 85% of the U.S. tobacco marketplace.
Reynolds and Lorillard told they plan to close the deal by June 30. This date was established by the tobacco companies back in July 15, 2014.
Major factor which played an important role in the FTC’s decision was the majority acceptance of Lorillard and Reynolds divestiture package. Imperial is going to purchase such Reynolds brands as Salem, Kool and Winston, such Lorillard brands as Maverick and blu eCigs. Imperial will be the owner of Lorillard’s Greensboro headquarters.
It is expected that Imperial will increase U.S. traditional cigarette market share from 3% to 10% with the help of these brands.
When Reynolds purchased Brown & Williamson Tobacco Corp. In 2004, Lorillard had an 8.4% market share and then it was increased to 15%.