Rumor of FTC merger meeting feeds rumor mill

A pivotal meeting between US federal regulators and representatives of Reynolds American and Lorillard is expected to take place this week, according to a story by Richard Craver for the Winston-Salem Journal citing a Wall Street Journal report.

The meeting with Federal Trade Commission (FTC) members could be the last step toward a decision on Reynolds’ $27.4 billion offer for Lorillard, which was announced on July 15 and which the two companies believe will close by June 30.

However, some analysts believe it could be a negative sign that the FTC board wants or needs another meeting at this stage, and they have put the odds of the deal’s being approved at 50-50.

Meanwhile, Wells Fargo Securities analyst Bonnie Herzog, who has projected an FTC decision as early as April, on Monday confirmed her belief that there was a 90 percent chance the deal would be approved.

“We believe the market’s negative reaction to these meetings is unjustified based on our industry sources that are telling us these meetings are completely normal and should be viewed as positive,” Herzog was quoted as saying.

“Further, our industry sources reiterated that absolutely no part of the FTC’s review process has been hostile.”