Lorillard acquisition talks confirmed

Reynolds American (RAI) and Lorillard have confirmed that they are in discussions about a possible acquisition of Lorillard by RAI.

The confirmations followed a statement by Imperial Tobacco—in response to U.K. disclosure obligations—that it had been part of the discussions as a possible purchaser of certain RAI and Lorillard brands and assets should the acquisition go through.

In a statement posted on its website, RAI said the acquisition discussions were consistent with its strategy of considering a variety of options to enhance shareholder value.

“British American Tobacco (BAT), RAI’s largest shareholder, is participating in these discussions,” said the RAI note. “If the transaction proceeds, BAT expects to support the transaction by subscribing for additional shares in RAI and would maintain its existing 42 percent equity position in RAI.

“Imperial is also involved in these negotiations as a possible purchaser of brands and other assets from Lorillard and RAI.”

Lorillard issued a similar statement, and BAT, in response to the statements by Imperial, RAI and Lorillard, confirmed that if the acquisition were to proceed it would expect to support the transaction by subscribing for additional shares in RAI, with the aim of maintaining its existing 42 percent equity position in that company.

BAT, RAI and Lorillard each said there was no guarantee that any deal would take place, and they added that, unless circumstances dictated otherwise, they did not intend to make additional comments regarding this matter.