Imperial Tobacco to become third-largest Cigarette Company in the US after Snapping up Brands from Rivals

Source from:  Daily Mail 05/28/2015

Imperial Tobacco shares neared record highs today after the company behind Davidoff Cigarettes, Golden Virginia rolling tobacco and Cohiba cigars looks set to become the third-largest player in the US.

It follows the announcement overnight by the Federal Trade Commission giving the go-ahead for US firm Reynolds takeover of rival Lorillard.
It means Imperial will now snap up brands Winston, Kool, Salem and Maverick as the US government watchdog has required Reynolds American and Lorillard to sell off four brands to win approval for the $27.4billion tie-up that will combine the world's second- and third-largest tobacco groups.

The regulator said that without the sell-offs, the merger raised significant competitive concerns by eliminating head-to-head competition between' the two companies.

The green light for the deal follows a protracted regulatory process which Lorillard chief executive Murray Kessler described as one of the most complex ever attempted.

The deal also included Imperial's nearest rival British American Tobacco, which owns 42 per cent of Reynolds, injecting $4.7billion into the combined company to maintain the size of its stake.

Imperial shares this morning were up 3 per cent, or 89.0p at 3,373.0p.

While British American Tobacco is 25.5p better at £36.37.

The share price increase is welcome relief for Imperial which has struggled of late.

Revenues have been hurt by the ongoing conflict in Iraq - one of its key growth markets - announcing a £500million fall in a recent trading update.
Imperial, along with other cigarette makers, is also facing falling sales in many markets as hard-up smokers cut back on tobacco due to cost and health concerns.

Imperial has cut costs and closed factories in its core tobacco business, and recently launched two new products that don't use tobacco - a caffeinated mouth strip and a new e-cigarette.

Imperial expect the transactions to be completed by spring 2015 however it still remains subject to an order from a United States District Court relating to a Department of Justice case relating to cigarette firms. Enditem