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Reynolds American to buy Lorillard in monster deal worth US$27.4 billion

NEW YORK--U.S. tobacco giant Reynolds American will acquire rival Lorillard to create a behemoth aimed at conquering the growing e-cigarette market, the companies announced Tuesday.

Reynolds, the second-biggest U.S. tobacco producer with its Camel and Pall Mall brands, will buy the U.S. number-three Lorillard for US$68.88 per share in a deal worth US$27.4 billion, including debt, the companies said.

The two companies also plan a major divestment of assets to British firm Imperial Tobacco. Following the completion of the Reynolds-Lorillard deal, Imperial will acquire leading Reynolds and Lorillard brands, including Kool, Salem, Winston and Blu, an e-cigarette.

Imperial will pick up Lorillard's manufacturing and research site in Greensboro, North Carolina, which includes 2,900 employees.

Imperial, the maker of Gauloises and Davidoff cigarettes, will pay US$7.1 billion in cash for the assets.

Reynolds will receive US$4.4 billion after taxes from the Imperial deal, which is contingent on the closing of the Reynolds-Lorillard transaction.

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