Reynolds American (RAI) and Lorillard (LO) Confirm Talks on Long Rumored Tie-Up

Rumored since early March, today both Reynolds American (NYSE: RAI) and Lorillard (NYSE: LO) confirmed the two sides are in talks regarding a potential RAI acquisition of Lorillard.

In connection with that transaction, RAI and Lorillard are in discussions with Imperial Tobacco Group PLC (LON: IMT) regarding the potential sale of certain assets and brands owned by RAI and Lorillard to Imperial.

RAI said British American Tobacco Plc, (NYSE: BTI), which owns 42 percent of RAI, approved the deal. British American Tobacco would maintain their equity stake in RAI if a deal proceeds.

Both RAI and Lorillard informed investors that no agreement has been reached at this time and there can be no assurances that any transactions will result.

Shares of LO are up 5% to $66.25 in pre-open trding, while RAI is flat.

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