An acquisition of U.S. cigarette-maker Lorillard Inc by Reynolds American Inc could face a bumpy road with antitrust regulators, experts said, with some predicting the deal could be blocked outright and others saying it could only go through with significant divestitures. The combination, which would bring Reynolds' Camel and Lorillard's Newport brands under one corporate roof, would join companies controlling 27 percent and 15 percent of the U.S. cigarette market, respectively. Marlboro maker Altria Group Inc is the market leader with roughly 50 percent.Reynolds is in active talks to purchase Lorillard in a complicated three-way transaction in which British American Tobacco could take a role, people familiar with the matter told Reuters on Wednesday.Among six antitrust experts surveyed by Reuters, two predicted it would be blocked, and one said it should be stopped but might survive an antitrust review because the product was cigarettes. Three said regulatory agencies would likely allow it to go through with asset sales.Beyond the market concentration in traditional cigarettes, the new company's market share in electronic-cigarettes could draw scrutiny. Lorillard's Blu currently controls about 50 percent of the market, but Reynolds plans to roll out its Vuse brand nationwide this summer. It remains unclear whether the merged company would keep both brands.
Lorillard, Inc. (Lorillard) is the manufacturer of cigarettes in the United States. Shares of LO fell by 4.98% or $-3.12/share to $59.51. In the past year, the shares have traded as low as $41.56 and as high as $63.56. On average, 3592560 shares of LO exchange hands on a given day and today's volume is recorded at 10806127.
Altria Group, Inc., is a holding company. At December 31, 2012, Altria Group, Inc. Shares of MO traded higher by 0.1% or $0.04/share to $40.68. In the past year, the shares have traded as low as $33.12 and as high as $40.77. On average, 7785840 shares of MO exchange hands on a given day and today's volume is recorded at 8286468.
Reynolds American Inc. (RAI) is a holding company. Shares of RAI fell by 2.07% or $-1.24/share to $58.53. In the past year, the shares have traded as low as $46.05 and as high as $60.00. On average, 2897080 shares of RAI exchange hands on a given day and today's volume is recorded at 4614396.
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