RJ Reynolds, the US tobacco giant, is exploring a bid for its rival Lorillard in a deal that would shake up the industry at a time of plummeting smoking rates and the rise of electronic cigarettes.
The exact value of an RJR bid is not known, but any offer could value the company at more than $20bn, people familiar with the matter said. It is unclear if RJR is planning to bid for all of Lorillard, buy part of it, or seek a merger. No deal is certain, these people stressed.
Lorillard, which makes brands including Maverick, Old Gold and Kent, has a market value of $18.7bn and was an early mover into e-cigarettes, buying the Blu brand in 2012 for $135m. Analysts estimate e-cigarette sales reached $2bn last year, three times 2012’s figure.
More than 80 per cent of Lorillard’s sales come from the Newport brand of menthol cigarettes, which have bucked a long-term decline in US smoking rates. The wider US cigarette market, with annual sales of $90bn, has been shrinking at a rate of 3 per cent a year.
Founded in New York in 1760, Lorillard controlled 11.7 per cent of the North American tobacco market in 2012, according to Euromonitor, compared with RJR’s 25 per cent and Altria’s 41.5 per cent.
RJR, which produces Camel, Pall Mall and Kool cigarettes, has appointed Lazard, the investment bank, to explore the deal, according to people familiar with the situation. None of the parties involved were immediately available for comment.
The deal would see British American Tobacco taking a major role, as the UK group – which has a far smaller US market share – owns 42 per cent of RJR.
持有RJ雷诺42%股份的英美烟草公司(British American Tobacco)将在这次交易中起到举足轻重的作用。该集团总部在英国，在美国的市场份额要小得多。
BAT took its stake in RJR almost a decade ago. A standstill agreement preventing a hostile takeover by the UK group comes to an end in July.
Lorillard shares were up 4.5 per cent to $51.27 in midday New York trading. Bonnie Herzog, an analyst with Wells Fargo Securities, said a “fair” price for RJR to offer could be “much higher” than $60.
周一纽约正午时分，Lorillard股价上涨4.5%，报每股51.27美元。富国证券(Wells Fargo Securities)分析师邦尼•赫尔佐克(Bonnie Herzog)表示，一个“公允”的出价可能“大大高于”每股60美元。
However, she raised questions about how RJR would finance such a move, saying it could be structured as merger, or BAT could help finance a takeover.
Additional reporting by Shannon Bond in New York