Seeking Alpha

Here come the tobacco mergers

  • Analysts thinks there could be a wave of consolidation in the tobacco industry as the slow growth rates seen in the industry appear to be here to stay.
  • The story of the week has been Lorillard (LO -1.7%) which is reportedly a target of Reynolds American (RAI -2.8%), but other linkups are expected.
  • The rapid emergence of e-cigarettes will play a factor in the M&A activity. The stance of various regulators will be critical in determining where companies place their bets.
  • Related stocks: MO, PM, BTI, ITYBY, ITYBF, PHJMF, JAPAF, SFIO, VGR, SWNG, SWMAF, SWMAY.
Comments (15)
  • locutus49
    , contributor
    Comments (867) | Send Message
     
    Back to the Future! I see MO merging with PM (*_*)
    6 Mar, 10:50 AM Reply Like
  • Tradevestor
    , contributor
    Comments (4014) | Send Message
     
    lol locutus. And spin off again and repeat, while shareholders rejoice
    6 Mar, 10:51 AM Reply Like
  • spiro3
    , contributor
    Comments (91) | Send Message
     
    Not a chance that PM would merge with MO since they already have a deal on e-cigs
    7 Mar, 12:15 AM Reply Like
  • MintyFresh32
    , contributor
    Comments (358) | Send Message
     
    I doubt it, locutus! Not even sure about LO and RAI. More power to them, I guess, but I'm not sure I see exactly how "the rapid emergence of e-cigarettes" plays a big role in whether they merge. Discuss the possible merger over here:http://bit.ly/1idwuhM
    6 Mar, 10:52 AM Reply Like
  • 2PP
    , contributor
    Comments (349) | Send Message
     
    I love this stock, but would head for the exit if it hits $80. 100% profit is very hard to walk away from.
    6 Mar, 11:10 AM Reply Like
  • Tradevestor
    , contributor
    Comments (4014) | Send Message
     
    Phew, $80 is still 60% away. But yes that would be too tempting to not sell.
    6 Mar, 11:13 AM Reply Like
  • Those Who Wait
    , contributor
    Comments (206) | Send Message
     
    But then it could split--and you'd be out all those extra dividends ...growing.....growing.
    6 Mar, 03:43 PM Reply Like
  • Tradevestor
    , contributor
    Comments (4014) | Send Message
     
    Dilemma. That;s one reason I do not want the merger. Its tough to find those 6% YoC that keep raising
    6 Mar, 04:54 PM Reply Like
  • Ruger454
    , contributor
    Comments (6) | Send Message
     
    If you need the money sell but beware capital gain taxes, 15% I believe. If you don't need the money ride the horse and enjoy the dividends. You could reinvest dividends or if you need the money take the cash dividend but hold onto shares a long as you can.
    9 Mar, 04:32 AM Reply Like
  • lfrankbaum
    , contributor
    Comments (3) | Send Message
     
    mutual funds salespeople are not real investor advisers...this is what I have learned
    6 Mar, 11:15 AM Reply Like
  • doc47
    , contributor
    Comments (992) | Send Message
     
    E-cigarettes are being rapidly outlawed or at least hindered in use (not to forget being taxed to death) in many cities, states and countries. I would not use them as a harbinger of good times for mergers or other gains for tobacco companies. Funny how the "morality police" decide Marijuana is legal and growing in acceptance but e-cigarettes are anathema!
    6 Mar, 07:41 PM Reply Like
  • spiro3
    , contributor
    Comments (91) | Send Message
     
    Probably this coming week RAI and LO will announce a merger and business combination with BTI. BTI will be taking the E-cigs, smokeless and Natural American Spirit cigs to the world Market. BTI will have to pay for the right to market those products outside the US. By 2017 RAI-LO would have at least 5.25 a share earnings and a 4.40 dividend. I'm telling you this will be huge as BTI would for sure contribute cash.
    7 Mar, 12:28 AM Reply Like
  • spiro3
    , contributor
    Comments (91) | Send Message
     
    Anyone that owned Reynolds when they merged with the American Tobacco company in 2004 would know that the stock went from like 32 to 47 in short notice. This is an even bigger deal. Wall street would value the new company at 65 a share and even more as BTI would take it's non cigarette products to the world market. RAI paid 4 billion for the smokeless product company and this deal would serve to triple the business. LO's E-cigs are a huge hit in the US and would be on the world scene growing to 20 times current sales. The combo would also save 350 million. The bad news is 1200 employees may lose a job but the good news is the E-cigs will be US made as well as the smokeless tobacco creating 6000-8000 jobs because they would be sold to the world.
    7 Mar, 12:37 AM Reply Like
  • ltinvstr
    , contributor
    Comments (14) | Send Message
     
    Let's pump and dump.
    7 Mar, 09:11 AM Reply Like
  • Tradevestor
    , contributor
    Comments (4014) | Send Message
     
    PM is attractive here http://seekingalpha.co...
    7 Mar, 04:46 PM Reply Like
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