Lorillard on fire with Reynolds American closing in

Lorillard (LO +9.4%) is up sharply on volume 6X normal trading activity after a report that Reynolds American (RAI +5%) will make a bid for the company spurs buying activity.

Financial Times reports that if a deal for the tobacco company is struck it would for a value of over $20B, although some inside sources indicate Reynolds might peel off some of the assets in its bid.

Wells Fargo thinks a fair takeout price for Lorillard as a whole would be much higher than $60.

What to watch: Analysts think an acquisition of Lorillard would allow Reynolds to make a stronger move into the growing e-cigarette market. Reynolds plans to launch Vuse later this year, but Lorillard's Blu brand is already a force.

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Comments (1)
  • spiro3
    , contributor
    Comments (484) | Send Message
    Reynolds will never take on 26 billion in debt to buyout LO. It will be a merger and LO will get 1.1 shares and $2 special dividend. Reynolds 42% owner will take the E-cigs international. Reynolds smokeless products will also be taken international. RAI share owners will also get a special $2 a share dividend. It's 42% owner BTI will contribute cash and or debt with a cut of the E-cig-Smokeless revenue stream. Expect 500 million in merger savings by 2018. Earning would project to 5.25 a share buy then. It's a deal Lorillard can't turn down
    3 Mar 2014, 09:42 PM Reply Like
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