The long rumored deal between Reynolds American RAI and Lorillard LO was officially announced Tuesday. For $27.4 billion of cash and stock, or $68.88 per share, Reynolds will take ownership of Lorillard.
The deal will take place just 2.5 percent Lorillard’s previous close, but 40.4 percent higher than Lorillard shares were trading at during initial media speculation. Lorillard shareholders will receive $50.50 cash and 0.2909 Reynold shares.
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Reynolds also announced the sale of KOOL, Salem, Winston, Maverick and blu eCigs brands to Imperial Tobacco ITYBY for $7.1 billion. Imperial will also receive some of Lorillard’s manufacturing and R&D facilities. After tax, Reynolds says it will receive $4.7 billion from the transaction.
Reynold’s current CEO, Susan Cameron, will continue to lead the combined company while Lorillard’s president and CEO will join the Reynold’s board.
Shares of Lorillard are selling off sharply in pre-market trading. At last check the issue was down 5.8 percent to $63.3. Shares of Reynolds and Imperial are unmoved.
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